Pakistan’s central bank, the State Bank of Pakistan (SBP), has unveiled a set of proposals that could change the country’s financial landscape by legalizing cryptocurrencies and Central Bank Digital Currencies (CBDCs). This move marks a significant step towards embracing digital currencies and their integration into the mainstream economy.
SBP Proposes Legalizing Cryptocurrencies as Legal Tender in Pakistan
On November 4, 2024, the State Bank of Pakistan (SBP) proposed a policy making cryptocurrencies and Central Bank Digital Currencies (CBDCs) legal tender. SBP Governor Jameel Ahmad and the Monetary Policy Committee (MPC) presented this plan, aiming to transform the country’s financial systems.
The policy changes will let state banks issue digital currency. It will also penalize unapproved digital asset issuers, opening the door for a government-backed digital currency—likely a digital rupee—to coexist with traditional currencies.
What Does This Mean for Cryptocurrencies and Digital Payments in Pakistan?
If approved, these amendments could significantly boost Pakistan’s cryptocurrency market. The SBP’s proposals would pave the way for a Central Bank Digital Currency (CBDC) and enable state banks to manage digital payments, making it easier for people in Pakistan to trade cryptocurrencies using blockchain systems.
The new policies aim to cut illegal trading and enhance cryptocurrency laws. They will regulate digital assets, with fines for unauthorized exchanges, making investments safer.
A Shift in Pakistan’s Crypto Stance
Pakistan’s stance on cryptocurrency has fluctuated. In May 2023, then-Finance Minister Aisha Ghaus Pasha hinted at a ban. Fast forward to March 2024, and a shift occurred with Muhammad Aurangzeb, ex-CEO of Habib Bank Limited, taking over as finance minister. Aurangzeb now advocates for regulating—not banning—cryptocurrencies.
This leadership change is pivotal, steering Pakistan towards a more crypto-friendly stance that aligns with global trends as more countries recognize the potential of digital currencies.
Impact on Pakistan’s Economy and Financial System
The SBP has proposed introducing a digital currency and cutting interest rates by 2.5%. This move could stimulate Pakistan’s economy. The MPC noted improvements in food inflation, oil prices, and gas tariffs, indicating positive growth.
Such recovery might increase interest in cryptocurrencies and digital assets in Pakistan. If approved, the SBP’s proposals would reassure crypto investors, reduce illegal activities, and help grow the digital asset market.
Looking Ahead: What’s Next for Cryptocurrencies in Pakistan?
Pakistan is set to advance its cryptocurrency regulations, signaling a bright future for digital assets. The government’s decision to regulate digital currencies and introduce a Central Bank Digital Currency (CBDC) is expected to boost everyday cryptocurrency use.
As Pakistan’s economy improves and digital payments become easier, a surge in cryptocurrency adoption seems likely, potentially positioning Pakistan as a leader in the region’s digital economy.
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Disclosure: This article is for educational purposes only and does not constitute investment advice.