Pakistan Bans Banks From Cryptocurrency And ICO Transactionsbr>
The State Bank of Pakistan (SBP), the country’s central bank, has banned banks and other financial services providers from serving crypto-related businesses.
In an official notice posted on its website, the SBP advised the general public that it regulates both domestic and international payment and money transfer services. It clarified that cryptocurrencies are “not legal tender, issued or guaranteed by the government of Pakistan,” and that the central bank has not authorized or licensed any individual or entity for the issuance, sale, purchase, exchange or investment in cryptocurrencies.
“All Banks/ DFIs/ Microfinance Banks and Payment System Operators (PSOs)/Payment Service Providers (PSPs) are advised to refrain from processing, using, trading, holding, transferring value, promoting and investing in Virtual Currencies/Tokens,” the central bank said. “Further, banks/DFIs/Microfinance Banks and PSOs/PSPs will not facilitate their customers/account holders to transact in VCs/ICO Tokens. Any transaction in this regard shall immediately be reported to Financial Monitoring Unit (FMU) as a suspicious transaction.”
The SBP has warned that any transaction with cryptocurrency is a punishable offense leading to “financial loss and legal implications.” It added that since cryptocurrencies provide “high level of anonymity,” they can be used for “illegal activities” by fraudsters, such as offering pyramid-style investment schemes and tokens promising high returns to the investors. People investing in cryptocurrencies will not be provided with legal protection if any loss occurred due to involvement in cryptocurrencies.
The move has prompted local crypto exchange Urdubit to shut down its operations. In its announcement on Facebook, Urdubit urged its clients to withdraw their funds as soon as possible.
Rodrigo Souza, the co-founder of BlinkTrade, which provided the open-source software that Urdubit has used, said that the statement released by the State Bank of Pakistan is targeted towards discouraging crypto investment.
“Governments and banks are going to fight bitcoin because investing with bitcoin means a bank run on the central bank,” said Souza. “We are working hard to return all PKR to all our customers before our bank shutdown our accounts.”
The move came after the Reserve Bank of India (RBI) barred all regulated financial institutions from engaging in crypto transactions. On Friday, the RBI issued a circular stating that any regulated entities that already provide cryptocurrency services are required to cut all ties within three months.