Pakistan Cryptocurrency Laws Regulation of Digital Currencies: Cryptocurrency, Bitcoins, Blockchain Technology
November 6th, 2020, Pakistan’s Securities and Exchange Commission (SECP) released a paper outlining potential approaches for regulating cryptocurrency in their country.[1] The SECP worked with the Financial Action Task Force for guidance and is inviting public commentary on the matter. The SECP claims to focus on the second approach outlined in the paper, advocating for a ‘let-things-happen’ approach described by the CFCT.[2] Pakistan aims to embrace the financial benefits of digital assets and innovation without overregulating. One option is to register Initial Exchange Operators by requiring due diligence procedures, ultimately allowing public offerings in capital markets through issuing security tokens.[3] Three approaches to secondary trading are offered: secondary trading on decentralized exchanges; separately register Digital Assets Trading operations that provide custodian services; or allow secondary trading on the Pakistan Stock Exchange.[4] Additionally, The Central Bank clarified that Pakistan has not banned cryptocurrency, easing their position from a statement in 2018 that urged banks and payment providers to refrain from engaging in cryptocurrency in any capacity.[5] The implementation of a comprehensive regulatory framework seems probable in the near future.
P.S. Insights on Cryptocurrency Legal Issues
Most jurisdictions and authorities have yet to enact laws governing cryptocurrencies, meaning that, for most countries, the legality of crypto mining remains unclear.
Under the Financial Crimes Enforcement Network (FinCEN), crypto miners are considered money transmitters, so they may be subject to the laws that govern that activity. In Israel, for instance, crypto mining is treated as a business and is subject to corporate income tax. In India and elsewhere, regulatory uncertainty persists, although Canada and the United States are relatively friendly to crypto mining.
However, apart from jurisdictions that have specifically banned cryptocurrency-related activities, very few countries prohibit crypto mining.
Our Freeman Law Cryptocurrency Law Resource page provides a summary of the legal status of cryptocurrency for each country across the globe with statutory or regulatory provisions governing cryptocurrency. The globe below provides links to country-by-country summaries:
[1] Kevin Helms, Pakistan’s SEC Discusses Cryptocurrency Regulation, Central Bank Confirms No Crypto Ban, Bitcoin.Com (Nov. 15, 2020), https://news.bitcoin.com/pakistan-cryptocurrency-regulation/.
[2]Securities and Exchange Commission of Pakistan, Regulation of Digital Asset Trading Platforms, 1-7, 5 (Nov. 6, 2020), https://www.secp.gov.pk/document/position-paper-regulation-of-digital-asset-trading-platforms/?ind=1604993043472&filename=Digital-Assets-Security-Tokens-Position-Paper.pdf&wpdmdl=40643&refresh=5faccef91544e1605160697.
