Pakistan was taken off the FATF gray list in October, and it has good reasons to want to stay in international good graces.
Pakistan will ban cryptocurrency services operating in the country and never legalize crypto trading, Minister of State for Finance and Revenue Aisha Ghaus Pasha said at a session of the Senate Standing Committee on Finance and Revenue on May 16, according to multiple local media reports. Other officials, including State Bank of Pakistan (SBP) Director Sohail Jawad, spoke in favor of the decision.
Pasha said banning crypto was one of the requirements set by the Financial Action Task Force (FATF), which removed Pakistan from its gray list in October. The gray list contains countries the body considers deficient in Anti-Money Laundering and Counter-Terrorist Financing measures but that are working with it to remedy their shortcomings.
The SBP and the Information and Technology Ministry were drafting the legislation for the ban, according to reports.
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The Pakistani Crypto Twitter community unleashed a frenzy of disapproval of the coming crypto ban. “I pray that government focuses on the right area which lead to scams and the apps which traps people instead of banning crypto,” Daniyal Azam wrote. “People are making handsome income with crypto trading and Govt want to take this last hope from Poor People of Pakistan,” Crypto Arena said.
The officials has been destroying Pakistan in the name of #FATF & #IMF. Whatever happens in this country, according to the officials, it's either IMF's fault or FATF's.
— Crypto Pakistan (@Crypto_Pakistan) May 17, 2023
May ALLAH soften their hearts for the country and common man. Ameen pic.twitter.com/ymHJ2sqbb6
FATF cannot impose sanctions on non-compliant countries, but its findings are likely to influence government and corporate policies worldwide. Pakistan’s economy is in deep crisis, and it is currently engaged in tense bailout negotiations with the International Monetary Fund, so a clean report from the FATF may be a political priority.
Crypto adoption in the country has been relatively high, with Pakistani citizens reportedly holding $20 billion worth of crypto in 2021. Government opposition to crypto is not new, however. The SBP has reportedly been seeking a crypto ban since at least January. Pakistan does, however, have plans to launch a central bank digital currency in 2025 and recently adopted a national blockchain Know Your Customer platform.
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