Coinspeaker Will Pakistan Legalize Crypto? Government Proposes to Amend SBP Act to Bring Digital Currency Legitimacy
The government of Pakistan has recently proposed amendments to the State Bank of Pakistan (SBP) Act, which would potentially allow the legalization of cryptocurrencies like Bitcoin BTC $68 385 24h volatility: 0.9% Market cap: $1.35 T Vol. 24h: $39.13 B and Ethereum ETH $2 436 24h volatility: 0.2% Market cap: $293.22 B Vol. 24h: $14.68 B in the country and the establishment of a national digital currency framework.
According to a local news report, with guidance from the Ministry of Law, the country’s Finance Ministry recently submitted a package of around a dozen amendments to the federal cabinet, introducing the concept of digital currency within the nation’s regulatory landscape for the first time.
Cryptocurrencies Could be Legalized in Pakistan
The drafted proposals, which are currently under review by the cabinet, would allow the SBP to manage Pakistan’s currency both in physical and digital forms, broadening the central bank’s mandate and enabling it to potentially issue its own central bank digital currency (CBDC).
This development is proposed through amendments to Section 4C and Section 17 of the SBP Act, which outline the bank’s authority over currency issuance and management.
Under the new framework, digital assets would be defined as “a digital form of currency issued by the central bank” and recognized as legal tender. This definition would establish a legal structure for the issuance and circulation of cryptocurrencies by the SBP.
If approved by the parliament and enacted into law, the Financial Ministry believes the amendment could open the doors to a regulated environment where digital currencies are recognized by the state. This would be an unprecedented move given the SBP’s previous warnings against Bitcoin and other cryptocurrencies. These warnings cited the anonymity of virtual currencies as a risk, linking them to possible illegal activities without legal protection for users.
Additionally, the proposed policy change introduces penalties for the unauthorized issuance of digital assets in Pakistan. Individuals found issuing digital currency without authorization from the bank could face fines up to twice the value of the illegal issuance.
Expanding the SBP’s Governance Powers
Apart from cryptocurrencies, the amendment touched upon other critical issues in the country, such as the potential overhaul of Section 13 of the SBP Act, which currently prohibits dual nationals from serving as governors, deputy governors, or non-executive directors on the SBP board.
According to Financial Minister Muhammad Aurangzeb, this restriction, implemented in January 2022, has limited the pool of qualified candidates who can take over the roles. He also cited the need to expand the talent pool for the SBP’s leadership.
The proposed policy changes also aim to enhance the SBP board’s powers. For instance, Section 9A would be modified to broaden the board’s oversight responsibilities, which would now include approving annual reports, economic updates, and financial stability reports.
Moreover, the revision to Section 9B would simplify governance by allowing the board chairperson or any three non-executive directors to convene a meeting rather than requiring a full board member.
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Will Pakistan Legalize Crypto? Government Proposes to Amend SBP Act to Bring Digital Currency Legitimacy
