Almost a year after a blanket ban on , Pakistan has come a long way in its attitude toward the space. A recent notice by the State Bank of Pakistan (SBP) that institutions willing to work in the sphere of “electronic money” can now get licenced by the SBP to “issue e-money for the purpose of digital payments.”
As by a Pakistani association, The Express Tribune, the government hosted a meeting at the Islamabad office of the State Bank of Pakistan on April 1 for the discussion and formation of crypto regulations, termed Electronic Money Institutions (EMI) .
The move toward compliance by the Pakistani government is far from what happened in 2015, when the country was on the Financial Actions Task Force’s (FATF) grey list, which indicated that the country’s laws to counter terrorism financing and money laundering were ineffective. This month, the , spurring the Pakistan government to take a more serious look at the issues.
Government regulation will help
Noting the government’s decision to regulate the use of electronic money, Muhammad Ahsan, the founder of , a consulting company, applauded the get-serious approach, with reservations.
“This step reflects the forward-thinking of Pakistani Government, and with a few more regulations and reforms, cryptos will get better space for development in Pakistan. But there is much more required to do beforehand.”
The ban on in Pakistan was first reported on April 6, 2018, after the central bank of Pakistan released a statement declaring that no individual or entity was authorized to issue, exchange or invest in any such virtual currencies/coins/. The cited security-related issues, the volatility of , and unstable crypto businesses and exchanges as the major reasons for imposing the ban.
Now, the Pakistani government is poised to start a serious examination of precautions that would allow cryptos to become a tool for the nation and stop them from being used for money laundering, terrorism funding and other illegal purposes.
Lack of demand amid the masses
There has hardly been any sign of crypto in the past 12 months in Pakistan due to the crypto ban. Ahsan mentioned that the “retail and commerce community still prefer conducting transactions over the conventional banking system.”
He also suggested that the of is about demand. Until now, the traditional financial system has proved to be effective, and telcos and microfinance banks are doing enough to , which further reduces the demand for in the subcontinent.
“The only way to bring crypto to the masses,” Ahsan said, “is to educate them about it.” And he says that, at this pace, Pakistan will “need a few years to accelerate and make crypto mass- a phenomenon.”
Further underlining the lack of acceptance of in Pakistan, Muhammad Usman Khan, the chief operating officer of , a United Arab Emirates-based knowledge hub, observed that “most retail and commerce communities still rely heavily on traditional business models and cash-based transactions.” He continued:
“Even in 2019, only a small percentage of the retail community accepts payments in digital form. Moreover, a great of business in the country still takes place in the informal sector via cash-based transaction.”
According to Khan, digital payment solutions have created traction for in the financial sector. However, because of the nation’s lack of proper, supportive crypto regulations, the “acceptance of as forms of payment may still be a long shot.”
On the other hand, some entrepreneurs from Pakistan have shown great interest in . But most of the advancement, Usman noted, comes in terms of outsourcing IT-related services, such as development. Interest in other applications of in the country, for now, are few and far between.
Usman hopes that the rapidly escalating support from educational institutions and tech incubators to entrepreneurs working in the sector will lead to a greater number of projects and an increased interest in the community in the coming time. That and the government finally getting serious about of the nascent industry should be a stepping stone toward more widespread projects and in Pakistan.
Published at Fri, 12 Apr 2019 04:03:40 +0000
