Virtual Currencies Will Facilitate Illegal Activities

Virtual Currencies Will Facilitate Illegal Activities: Bitcoin, Litcoin, Pakcoin, DasCoin, Pay Diamond etc are some of the active virtual currencies that are not recognized legal in Pakistan. They have not obtained any license or authorization certificate for the issuance, sale purchase, exchange or investment under the State Bank of Pakistan.

 These virtual currencies have high degree of privacy and can be used to facilitate unlawful activities. Due to their unclear nature no legal protection is available in case of any loss or damage.

Virtual Currencies Will Facilitate Illegal Activities
Virtual Currencies Will Facilitate Illegal Activities

No entity is currently licensed or authorized by SBP to offer money remittance services and products in Pakistan using virtual currencies.

 Persons using virtual currencies for the purpose of transferring value outside Pakistan are subject to prosecution as per applicable laws.

  • Domestic and international payment and money transfer services in Pakistan are regulated by SBP under the applicable laws.
  • Financial institutions and general public not to trade in Bitcoin or other Crypto currencies as in Pakistan virtual currency is not recognize as legal tender.

Risks of Using Virtual Currency

As per State Bank of Pakistan

  • One of the risks was high price volatility as investments tied to virtual currencies were highly unstable and were primarily based on speculations.
  • Another risk was failure and closure of virtual currency exchanges, businesses due to any reason including action by law enforcement agencies
  • Hacking of security compromises on crypto currency exchanges and wallet businesses and is yet another risk as a number of instances have been recorded around the world where huge amount of funds have been lost due to the same reason.
  • Hoaxers are also offering pyramid style investment schemes and coins and promising high returns (similar to Ponzi schemes) to the people at large in Pakistan.

State Bank of Pakistan has advised in the interest of general public to be cautious and abstain from involving in activities relating to mining, trading, exchanging, transferring value, promoting and investing of virtual currencies to avoid any potential financial loss and legal implications.

State Bank of Pakistan Ruling

“Banks/ DFIs/ microfinance banks and payment system operators/ payment service providers have been advised not to facilitate their customers/account holders to transact in virtual currencies/ initial coin offerings, tokens vide BPRD’s Circular No. 03 of 2018.”

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