The governor of Pakistan’s central bank is unlikely to adopt cryptocurrencies as legal cash because he sees no way for digital currencies to foster financial inclusion or innovation.
While blockchain, the underlying technology behind cryptocurrencies, has the potential to solve numerous difficulties faced by the financial sector, including financial access, inclusivity and creativity are not among them, according to SBP Governor Reza Baqir.
“When we look at the value proposition presented by cryptocurrency right now, the only use cases that have been brought forth are exchanges,” Baqir added. Some industries are advocating for Bitcoin to be regulated so that people can speculate on digital assets and send money across borders.
“Every new item has some benefits and some risks,” he concluded. It is the responsibility of a policymaker to analyze the balance… in particular, to determine if the benefits outweigh the risks when it comes to the use of cryptocurrencies in Pakistan.
Baqir also highlighted reservations about the seeming lack of transparency in digital assets, particularly in transactions that are subject to fraud.
Pakistan: Cryptocurrency is still linked to financial crimes
“There is no way that the regulator or a law enforcement body has visibility on who is performing transactions and for what reason,” the SBP Governor continued. As a result, there are numerous instances of bitcoin misuse around the world, including human rights violations, human trafficking, money laundering, and a variety of other issues.”
Banking Pakistan regulators, such as the SBP, are entrusted with promoting financial inclusion and preventing actors from exploiting the financial system, he noted. The Financial Action Task Force (FATF), an intergovernmental organization created in 1989 to develop regulations to combat money laundering, has placed Pakistan on the grey list.
He went on to say that the country is also attempting to shake off its negative reputation as a result of criminals using its financial system to launder money or fund terrorist activities.
The SBP is the latest central bank to reject cryptocurrencies as a means of trade, joining a growing list of banking regulators.
Digital assets “do not reflect characteristics of money” according to Malaysia’s Deputy Finance Minister II Yamani Hafez Musa, who also stated that cryptocurrencies are not an acceptable payment mechanism for the country.
“Digital assets like Bitcoin and Ethereum are not fit for use as a payment instrument because they lack the properties of money,” he explained.
In February, the Reserve Bank of India said that crypto assets will not be accepted as legal money in India.
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