Pakistan wants to unlock a new era of digital finance with crypto-currency.
The government of Pakistan is working on a framework to regulate crypto currencies such as Bitcoin (BTC).
The Securities and Exchange Commission of Pakistan, or SECP, has published a consultation paper on the regulation of digital assets. Published on 6 November, the paper outlines the main concepts for the growing digital finance market in Pakistan and examines existing regulatory frameworks developed by other global jurisdictions.
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In the paper, SECP emphasises that digital assets – also known as virtual or crypto assets – are the „beginning of a new era in digital finance“. According to the regulator, the new era of digital finance „could only be possible through the start of a new era that reinvents the regulatory regime [or] measures as they are known to regulators around the world today.
SECP noted that the consultation paper focuses exclusively on private cryptography and does not include comments on central bank digital currencies, or CBDC.
Crypts struggle with mass adoption in Pakistan
Distinguishing between various types of digital assets, SECP pays particular attention to value tokens and utility tokens. According to the regulator, one of the main advantages of value tokens is the possibility of splitting up each asset, which allows for benefits such as lowering the barriers to investment for retail investors. Other benefits include transparency, improved liquidity, better clearing and settlement mechanisms and more automation tools, as the document reads.
The SECP will continue to work with market participants and will welcome industry feedback on the development of a regulatory framework for cryptosystems.
The Central Bank of Pakistan intends to issue its own digital currency by 2025
Pakistan has been slow to adopt new frameworks for digital money and crypto-currencies. Last year the country planned to introduce new digital currency regulations for e-money institutions. In April 2019, Pakistan’s central bank announced plans to issue a CBDC by 2025.