The government of Pakistan is proposing amendments to their central bank act in order to recognize digital currencies and empower its state bank to govern central bank digital currencies (CBDCs) in a step to exercise autonomy over the crypto economy in the south-Asian country. Pakistan’s move has closely followed the trajectory of its neighbor India that has actively promoted CBDCs but remained skeptical of cryptocurrencies.
As per Pakistan media reports , the union government is going to introduce several amendments in the State Bank of Pakistan (SBP) Act including official recognition of digital currencies. If this proposal is accepted then, digital currencies will accepted as legal tender throughout the country for the first time.
Moreover, these changes will give the central bank full control over these digital assets, they will regulate, issue, and manage them in digital and physical forms. The proposal describes digital currency as “a digital form of currency issued by the bank under section 24 as legal tender under section 25.”
Section 24 gives the SBP the authority to issue banknotes, which are recognized as legal tender under Section 25.
Previously the State Bank of Pakistan issued a public warning to digital currencies such as Bitcoin, Litecoin, and more saying these tokens were not considered legal tender in Pakistan. The regulations raised their concern about these currencies as they could be used in illegal activities and also noted that there is no legal protection in such cases. Pakistan is currently trying to avoid getting listed in the “grey list” of Financial Action Task Force(FATF) and one of its conditions is to avoid legalization of cryptocurrencies.
This new amendment introduces penalties for unauthorized digital currency issuance. The fine will be twice the value of the illegal issuance. Furthermore, the amendments also eliminate restrictions on dual nationals in high-level positions at the SBP, overturning a rule from 2022 that was recommended by the International Monetary Fund (IMF).
