Cryptocurrency is on a high in Pakistan! With its growing adoption, the government is realizing the need to regulate it. Pakistan is one of the emerging markets in Southeast Asia with a population of approximately 250 million. The country’s population majorly is below the poverty line and the people are hopeful that good times are coming. Meanwhile, Bitcoin adoption has increased in Pakistan even without any regulated exchange in existence. Due to the widespread acceptance of cryptocurrency in Pakistan, crypto regulations seem necessary in the region.
In this report by Coinpedia, we will uncover the crypto regulatory scenario in Pakistan in 2024.
Crypto adoption, including Bitcoin, has increased significantly in Pakistan, even though there is no existing regulatory framework here. People use peer-to-peer services like Binance, Paxful, and other OTC trade methods in Pakistan. In 2020, Pakistan’s Securities and Exchange Commission (SECP) released a paper quoting the potential approaches for regulating crypto in the country. The State Bank of Pakistan released a public notice which states that cryptocurrencies are neither recognised as legal tender nor has SBP authorized or licensed any individual or entity for the issuance or operations in any virtual currencies.
As we know, blockchain-based and crypto-related activities are not supported in Pakistan by regulatory agencies. The latest ban has criticized a few crypto-related activities. Let us have a look at the legal status of the following crypto essentials:
Bitcoin | Banned/ Illegal |
NFTs | Illegal |
Mining | Illegal |
Trading | Illegal |
DeFi | Allowed |
Currently, there is no tax on holding or trading crypto assets in Pakistan! However, there have been several proposals.
The FPCCI proposed a tax for converting crypto to Pakistani rupees, a 5% tax on encashing crypto held as deposits in foreign exchange accounts, and a 10% tax on encashing crypto held as deposits in Roshan digital accounts. Under the proposed law, crypto gains shall be charged as per Section 37A of Income Tax Ordinance, 2001, and should be defined as “securities”, a 15% tax on profits from crypto trading is being put forth.
As per our research, the main factor which affects the crypto scenario in Pakistan is that its principles contradict those of Islam as it is an element of uncertainty. Due to no central authorities or intermediaries, there are possibilities of fraud. The high volatility of crypto is also classified as “gharar” (uncertainty) in the Islamic finance system.
Pakistan has been doing well in terms of crypto adoption despite its illegal status. Crypto enthusiasts are exploring new possibilities. Debates and discussions are still ongoing in Pakistan about crypto legalization. We are optimistic about a better crypto approach by the Pakistani government in future.
The recent crypto adoption report shows that Bitcoin adoption in Pakistan has increased significantly even without any regulatory framework. People use peer-to-peer services like Binance and other OTC trade methods to acquire Bitcoin in Pakistan. The country ranks among the top countries in Bitcoin adoption rate in emerging markets in the developing world.
The regulatory framework is getting evolved gradually in Pakistan as the acceptance is gaining pace!
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