State Bank of Pakistan Issues Advisory Urging Public to Refrain From Engaging in Cryptocurrencies

The State Bank of Pakistan (SBP) has issued an advisory urging the general public to refrain from engaging in cryptocurrencies, emphasizing that these virtual currencies are not recognized as legal tender in Pakistan.

Karachi, November 24, 2024 – The State Bank of Pakistan (SBP) has issued an advisory urging the general public to refrain from engaging in cryptocurrencies, emphasizing that these virtual currencies are not recognized as legal tender in Pakistan.

The SBP clarified that Virtual Currencies/Coins/Tokens (e.g., Bitcoin, Litecoin, Pakcoin, OneCoin, DasCoin, Pay Diamond, etc.) are neither legally recognized nor has the SBP authorized or licensed any individual or entity to issue, sell, purchase, exchange, or invest in such virtual assets in Pakistan. Moreover, banks, Development Finance Institutions (DFIs), Microfinance Banks, and Payment System Operators/Payment Service Providers (PSOs/PSPs) have been directed, via BPRD’s Circular No. 03 of 2018, not to facilitate customers in transactions involving Virtual Currencies, Initial Coin Offerings (ICOs), or Tokens.

The SBP warned that Virtual Currencies/Coins/Tokens, due to their high level of anonymity, could potentially be exploited for illegal activities. Furthermore, the ambiguous nature of these currencies offers no legal protection or recourse in cases of financial losses stemming from:

a) High price volatility: Investments in Virtual Currencies are extremely unstable and speculative.

b) Failure or closure of exchanges/businesses: This includes closures due to law enforcement actions.

c) Hacking or security breaches: Several global instances have shown significant losses resulting from the hacking or compromise of cryptocurrency exchanges and wallet businesses.

The SBP also highlighted the risk of pyramid-style investment schemes and fraudulent coins promising high returns, similar to Ponzi schemes, which pose a significant financial risk to the public in Pakistan.

The central bank emphasized that domestic and international payment and money transfer services in Pakistan are regulated by the SBP under applicable laws. No entity has been licensed or authorized by the SBP to offer money remittance services or products using Virtual Currencies/Coins/Tokens. Individuals using such assets to transfer value outside Pakistan may face prosecution under relevant laws.

In light of these concerns, the SBP advises the public to exercise caution and avoid involvement in mining, trading, exchanging, transferring value, promoting, or investing in Virtual Currencies/Coins/Tokens. This measure aims to help the public avoid potential financial losses and legal consequences.