Crypto still illegal in Pakistan, NA panel told

• FMU, FIA can investigate crypto dealers, traders.
• No change in crypto policy from central bank, says SBP.
• NA body decides to take briefing from the PCC on crypto.
  

The Standing Committee on Finance of the National Assembly was apprised by the federal government on Thursday that cryptocurrencies are still illegal and banned in Pakistan, despite the government’s adding Bitcoin, a digital currency, to its strategic reserve soon after constituting the Pakistan Crypto Council (PCC).

All those involved in dealing with cryptocurrency could be investigated by the Financial Monitoring Unit (FMU) and the Federal Investigation Agency (FIA), the NA body was told, The News reported.

The committee met at the Parliament House in Islamabad, with Nafisa Shah in the chair on Thursday.

Although, Secretary Finance Imdad Ullah Bosal conceded before the committee that there was no legal parliamentary backing for digital cryptocurrency, the Pakistan Crypto Council (PCC) was established under the chairmanship of Finance Minister Muhammad Aurangzeb but it was just a task force for recommending legal and procedural framework to move ahead.

He said the government had appointed a special assistant to the prime minister (SAPM) on crypto. He also said that he was not deemed worthy of making member of the PCC.

The State Bank of Pakistan (SBP) officials also apprised the forum there was no change in crypto policy from the central bank.

“In 2018, the central bank had issued instructions to its regulated entities, and those instructions are still valid, declaring that the holding and trading of cryptocurrencies are illegal. These entities are bound to report such cases to the Financial Monitoring Unit (FMU) for ongoing investigations by the FIA,” SBP Executive Director Sohail Jawad, testified before the committee.

The committee chairman wondered how the crypto council was established without consulting the parliament and the SBP. To which, the secretary finance said it was constituted by Prime Minister Shehbaz Sharif through executive orders.

Mirza Ikhtiyar Baig asked why the government does not provide 2,000MW electricity to the local industry instead of mining crypto currencies through it.

The secretary of finance suggested that the committee convene the PCC high-ups, SBP and SECP in the next meeting and get a detailed briefing on this subject.

The standing committee of NA decided to take briefing from the PCC on crypto and from the energy sector secretary on allocation of 2,000MW electricity for crypto.

Irrespective of the political divide, the parliamentarians on this occasion raised relevant questions. MNA Sharmila Farooqui inquired how the government would overcome money laundering and terror financing with the provision of legalising cryptocurrencies.

MNA Usama Ahmed Mela asked if the government wanted to do mining of cryptocurrencies itself or the private sector would do it.

“Earlier, hawala hundi was done now money is sent through crypto abroad,” he added, expressing reservation on usage of cryptocurrencies.

The PTI parliamentarians inquired why the Ministry of Finance allocated 2,000MW electricity at a subsidised rate of 8 cents for the mining of cryptocurrencies. They said the IPPs were generating the bulk of power and asked if the government will alter the contracts without their consent.

Secondly, they asked if the government provided cheaper electricity for mining of data for crypto, then who will provide the subsidy, or will it create another kind of circular debt monster.