Senate committee wants strong govt regulatory framework for crypto currency business
Islamabad: Senate Standing Committee on Cabinet Secretariat called for stringent government’s regulatory framework for virtual assets to minimize the risk of frauds and misuse of it.
The committee meeting chaired by Senator Rana Mahmood-ul-Hassan was briefed by Bilal Bin Saqib, Chairman of the Pakistan Virtual Assets Regulatory Authority (PVARA), on the emerging virtual-asset sector and the Government’s regulatory framework. He said virtual-asset technology was already operating across global markets and that governments in jurisdictions including the UAE, Hong Kong and Thailand were pursuing related initiatives. He added that Pakistan was not seeking to promote cryptocurrency but to regulate an activity that had already gained significant traction among young people.
Saqib said young Pakistanis had helped make the country the world’s third-largest crypto market and that, according to the authority’s assessment, around 40 million Pakistanis had accounts linked to crypto. He noted that the State Bank of Pakistan had maintained a restriction on digital assets for eight years and argued that banning the technology had frozen the country’s ability to adapt to it.
According to the PVARA Chairman, major international companies had submitted applications to enter Pakistan because they believed the country’s policy direction was now stable and predictable. Two international virtual-asset companies had so far been issued no-objection certificates. Virtual-asset businesses had been given until 5 September to complete registration, after which restrictions and enforcement action would begin against unregistered operators.
He said Pakistan had established its virtual-asset regulatory regime within five months, describing it as among the fastest such frameworks in the world, and stated that Pakistan was ahead of India in terms of regulation. He estimated the size of Pakistan’s virtual-asset market at USD 250 billion, with USD 10 billion to USD 20 billion of Pakistani money invested in the sector, and said the majority of users were below the age of 40.
He noted that India had imposed a 30 per cent tax on virtual assets but said Pakistan did not want to adopt a similar approach without considering its wider impact. The government was examining the appropriate level of taxation because the sector was heavily used by young people; excessive taxation, he warned, could push investors and businesses offshore.
The cabinet secretary said cryptocurrency-related businesses would not be permitted to operate without licences and that licensing would help eliminate fraud from the sector. Saqib said the authority was now recruiting permanent staff. It had used only 8 per cent of the government budget allocated to it to establish the authority and had returned the remainder to the government.
He said virtual-asset activity could benefit Pakistan through remittances and foreign exchange. Pakistan currently receives USD41 billion in remittances, and reducing transaction costs could bring an additional USD2 billion in foreign exchange into the country. The authority was working on modalities with the SBP, which is represented on its board, to identify more cost-effective channels and to bring activity currently taking place in the grey market into the regulated system.
The committee also sought clarity on religious concerns over cryptocurrency, on which Saqib said he had discussed the issue with Mufti Taqi Usmani and had conveyed the regulatory perspective. In response to a question whether the scholar would issue a statement, he said a joint statement would soon be issued in this regard.
