New Crypto Regulation in Pakistan: What the SBP Act is All About

The Pakistani government is moving forward with crypto regulation by proposing key amendments to the State Bank of Pakistan (SBP) Act. These updates aim to grant the SBP the authority to issue digital currencies, such as Bitcoin, and allow dual nationals to hold top roles in the central bank.

The proposed amendments are a big step toward creating a clear regulatory framework for digital currency in Pakistan. By expanding the SBP’s role, the amendments support both digital finance innovation and more diverse leadership within the central bank.

Finance Ministry’s Plan for Reform

According to government sources, the finance ministry has put forward about a dozen amendments, which the Ministry of Law has reviewed. These proposals are now headed to the federal cabinet for approval, marking a significant policy shift toward modernizing the financial sector.

One amendment clarifies that the SBP will manage Pakistan’s currency in both physical and digital forms, allowing the central bank to oversee digital currency issuance alongside traditional currency management.

New Subsidiary for Digital Payment Innovation

As part of this initiative, the SBP is set to launch a subsidiary focused on advancing digital payment systems. This step is expected to improve financial accessibility and efficiency for a wider population, promoting inclusion and innovation in Pakistan’s financial sector.

The amendments would also lift the ban on dual nationals holding positions like governors, deputy governors, and non-executive directors on the SBP board. This restriction, enacted in January 2022 due to IMF-related changes, was not explicitly recommended by the IMF. Removing it is seen as a way to expand the central bank’s talent pool and bring in more expertise.

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Legal Provisions for The First Time!

For the first time, the SBP Act will include legal provisions for digital currencies, marking a shift from the bank’s previously cautious approach. In the past, the SBP had warned against digital currencies, but these amendments signal a more open and structured regulatory approach.

To ensure control, the amendments propose penalties for the unauthorized issuance of digital currencies. Other changes aim to improve SBP governance by giving its board more authority over financial report approvals and setting clearer guidelines for board meetings.

These changes, if approved, could significantly transform financial governance and digital currency use in Pakistan, potentially creating new opportunities for economic growth and innovation.

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