Angle: Pakistan's Crypto Boom, Legislation Falling Backwards

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[Islamabad, 16th Reuters] - Once a week, Mr. Ghulam Ahmad (38) logs into the dialogue app "Whatsup" in between his consulting work on crypto assets (virtual currency) and asks what kind of It teaches hundreds of members how to “mine” and trade cryptocurrencies.

Participants range from housewives looking for extra income to wealthy investors looking to purchase mining equipment. Many people have little understanding of even how the traditional stock market works, yet everyone is eager to make money.

"When I set up a question corner, I was flooded with messages, so I spend hours answering questions and teaching the basics of cryptocurrency," said Ahmad, who thought mining bitcoins would be more profitable. I quit my job in 2014.

Pakistan is experiencing a boom in cryptocurrency trading and mining, with thousands of related videos viewed on social media and a large number of transactions on online exchanges.

Crypto assets are not illegal in Pakistan. However, the Financial Action Task Force (FATF), an international organization that examines countermeasures against money laundering in countries and regions around the world, has put Pakistan on a "grey list", citing lax monitoring of terrorist financing and money laundering. I'm putting

In response to these moves, the Pakistani government set up a committee to consider the regulation of crypto assets. The committee includes the FATF as an observer, as well as ministers of the Pakistani government and heads of intelligence agencies.

Executive Frontier Capital partner and committee member Ali Farid Kwaja, chairman of a brokerage firm in Karachi, said, “Half of the members have no idea what cryptocurrencies are, and even try to understand them. I didn't."

Mr. There is a possibility that it will not be done," he said.

Pakistan's central bank governor Bakir said on CNN television in April that he was considering a central bank digital currency (CBDC), noting the possibility of incorporating off-the-books transactions into the regulatory framework. “We will be able to make some announcements in the coming months,” he said.

The governor did not respond to a request for comment from Reuters on this remark.

Crypto assets are also attracting attention in the educational world. The Lahore University of Management Sciences, one of the country's leading universities, received a $4.1 million research grant in February this year from Stax, a blockchain network that connects Bitcoin to apps and smart contracts.

However, for those who support the spread of crypto assets, the development of related laws and investment cannot be said to be fast enough.

Concerns about money laundering by financial institutions have also cast skepticism on those involved in trading crypto assets.

Ahmad has been arrested twice by the Federal Investigation Agency (FIA) and charged with money laundering and electronic fraud, but was acquitted at trial.

Ahmad said the FIA ​​had seized a crypto-asset mining facility in Shangla, Khyber Pakhtunkhwa province in the north of the country, powered by its own hydroelectric power plant. The FIA ​​did not respond to Reuters' request for comment.

Former TV host Wakar Zaka, who has more than one million followers on YouTube, has spent years lobbying governments to legalize the cryptocurrency industry and public investment in the industry. Zaka, like Ahmad, has set up a cryptocurrency mining facility powered by hydroelectric power.

Earlier this year, the Khyber Pakhtunkhwa state government appointed Zaka and Ahmad as members of a committee to consider how to profit from crypto-related ventures. In March, it announced that it was considering setting up a new mining facility, using Zaka's facility as a template.

However, the state government disbanded the committee in June, arguing that new policies on crypto assets should be handled by the federal government.

Although there are challenges, Pakistan's cryptocurrency boom shows no sign of stopping.

Pakistan-based social media groups often explain how to trade and mine cryptocurrencies, some with tens of thousands of Facebook followers. Cryptocurrency videos written in Urdu have been viewed hundreds of thousands of times on YouTube.

Online cryptocurrency exchanges based outside Pakistan like LocalBitcoins.com have hundreds of registered Pakistani traders, some with thousands of successful trades. .

According to web analytics firm SimilarWeb, cryptocurrency trading apps such as Binance and Binomo have more downloads than the apps of the country's largest banks.

The sooner Pakistan joins the rest of the world in establishing regulations, the better, as crypto assets cannot be stopped, Ahmad said.

(Reporter Umar Farooq)

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