The State Bank has not outlawed digital currency in Pakistan despite claims to the contrary, according to a lawyer for the country’s central bank.
In a statement to the Sindh High Court, the lawyer said the bank had not banned digital currency or digital currency-related businesses as reported, but had instead issued guidance warning against the use of digital currency.
The comments were made in a case first brought back in January, filed in response to concerns that law enforcement agencies were acting beyond their powers in prosecuting individuals for engaging in digital currency transactions.
The lead petitioner in the case, TV presenter and social worker Waqar Zaka, said the digital currency ban had been misreported in local press, leading to enforcement action against individuals with digital currency holdings—despite no law passing parliament giving powers to that effect.
While the central bank said they could not guarantee any investment in digital currency, it could not stop individuals from starting new businesses.
The court has demanded the federal government submit a written reply to the issues raised in the case, while summoning the deputy director of the FIA Cybercrime Wing to appear in person at the next hearing.
The confusion dates back as far as April 2018, when the State Bank first warned individuals and companies not to engage in digital currency business.
“The SBP has not authorised or licensed any individual or entity for the issuance, sale, purchase, exchange or investment in any such virtual currencies/coins/tokens in Pakistan.”
Banks had since been prohibited from “processing, using, trading, holding, transferring value, promoting and investing in virtual currencies/tokens.”
According to the central bank, its concerns stem from the high volatility of digital currencies, as well as the association of coins like BTC with money laundering and other criminal activity.