KARACHI: Pakistan recorded around $ 20 billion worth of cryptocurrency in 2020-21, according to a latest research report from the Policy Advisory Board (PAB) of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) ).
The report recommended that government authorities regulate cryptocurrencies by implementing the legal framework to better align with the guidelines of the Financial Action Task Force (FATF) and the International Monetary Fund (IMF).
He said that Pakistan’s cryptocurrency adaptation has gained momentum over the past two years and the country has ranked 3rd in the Global Crypto Adoption Index 2020- 21, showing an abnormal increase of 711%.
“Pakistan recorded around $ 20 billion worth of cryptocurrency in 2020-2021,” he said.
However, the current legal framework in Pakistan has kept cryptocurrency in the gray zone.
The State Bank of Pakistan (SBP) has advised the general public to refrain from engaging in cryptocurrencies, while prohibiting entities under its umbrella from trading virtual currencies. Pakistan’s trading partners and lenders such as China and the IMF have both criticized the technology.
In addition, the FATF called on the Pakistani authorities to better regulate the crypto industry.
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The report says that investors are; However, we are currently using a peer-to-peer (P2P) crypto investment mechanism that makes investments in crypto assets go undetected.
Pakistan has great potential to cash in the windfall gains of billions of dollars in crypto assets from Pakistani nationals / doubles. It is imperative to channel the accumulated virtual currency assets of Pakistani investors first, which will help increase reserves, as well as additional capital can be injected into the already struggling economy, according to the report.
A single asset declaration system as well as a capital gains tax are strongly recommended. In addition, there is an urgent need to develop a regulatory framework and a national cryptocurrency strategy to adopt the ecosystem at the earliest in order to safeguard economic interests and minimize the vulnerabilities of the new system.
Either way, there are huge speculative gains in digital coins which may not have legal tender status, but should be formalized as an asset class.
In addition, cryptocurrency-linked exchange-traded funds (ETFs) will attract domestic and foreign portfolio investment. This will help the Pakistan Stock Exchange to regain its status as an emerging market. Any undue delay in converting these into solid assets may divert them to other more convenient countries.
The influx of cryptocurrencies has taken the world by storm, with many countries still seeking opportunities to embrace decentralized financial technology by carefully examining the opportunities and threats rather than putting an outright ban or the completely embrace. Bitcoin is the first decentralized digital asset, introduced in 2006, which has now grown to a market capitalization of around US $ 1 trillion.
Countries around the world are struggling to regulate this new, technology-backed, decentralized segment. Economies are undecided about the future of cryptocurrency. Small countries like El Salvador have adopted Bitcoin as legal tender while large economies like the United States, China and India are trying to restrict it either by introducing general bans or adopting it with limited scope. .
Copyright Business Recorder, 2021