A committee of the Senate raised concerns for the proposed bill for a virtual asset for Pakistan as it could aggravate the existing issues of unrecorded monetary transactions and financial crime without adequate provisions for dealing with cryptocurrency.
Informal Channel for the Usage of Cryptocurrencies missueK concerns
During the session of the Senate Committee Finance that is chaired by Senator Saleem Mandviwalla, Members of the assemblies stated that the bulk of crypto transactions that take place in Pakistan are routed through the illegal hawala and hundi payment systems. Mandviwalla pointed out the imperative need for regulations, as Pakistan is ranked 8th in cryptocurrency investment which demonstrates potential but also a risk.
Misuse for Criminal Purposes is a New Menace
“People who have been abducted also need to pay a ransom in cryptocurrency now, digital currencies are already being abused in bold criminal acts. Senator Mohsin Aziz is of the view that the absence of regulations is encouraging lawless acts.”
Call for Oversight by State Bank and Law Ministry
Pakistani officials in charge of the State Bank of Pakistan do acknowledge the existence of ‘grey’ borders which classify crypto assets as illegal in Pakistan, even as the central bank has issued warnings to the public many a time. The Deputy Governor pointed out that while the youth of Pakistan have demonstrated potential in mastering trading, the unregulated marketplace is a danger to them.
Overview – The Ministry of Law’s representatives have stated that the draft policy does provide for an independent board for oversight, to be populated by specialists in the appropriate fields of technology, finance and regulation. Mandviwalla, on the other hand, argued that the law should contain more rigorous standards of qualification which should be primary rather than secondary legislation.
Taxation Overview – The Finance Secretary, Imdadullah, has reiterated that Pakistan has not yet crafted any legalities regarding virtual assets, however he added that the draft is meant to enhance the ability to track virtual assets in Pakistan and also track the potential for money laundering.
Debates have also emerged from taxation as a whole. Senator Dilawar Khan has argued for a flat taxation of 5% crypto assets, claiming that it could increase overall compliance by 40% and overall revenue as well. Khan voiced caution against heavy taxation in an attempt to ‘formalize’ the market which even he said has been over complicated.
Malpractice and Illegal Trade at a Greater Scale
Senator Anusha Rahman complained about border control and argued with the customs officials about corruption at numerous checkpoints along the Quetta–Taftan route. She raised the issue of the possibility of the new bill on money laundering to be more permissive of malpractices rather than control them excessive money laundering.
The Opportunity and Risk are Balanced
The meeting concluded with the same agreement. Digital assets provide a chance for the financial system of Pakistan to enter a fast-growing global market, but, at the same time, they are also capable of financing criminal activities, illegal remittances, and money laundering. If Pakistan wishes to take the advantages of crypto, the committee is of the opinion that the country is required to have clear, stern measures to prevent financial exploitation and increased vulnerabilities.
