#CryptoMarket4T Pakistan Cryptocurrency Laws & Regulation Overview

On November 6, 2020, Pakistan’s Securities and Exchange Commission (SECP) released a position paper outlining potential frameworks for regulating cryptocurrency, blockchain technology, and digital assets in the country. The paper highlights a forward-looking approach, aiming to balance innovation with financial stability.

The SECP, working in coordination with the Financial Action Task Force (FATF), emphasized a "let-things-happen" strategy, inspired by the U.S. Commodity Futures Trading Commission (CFCT). This method allows for the organic development of digital asset markets, encouraging innovation without imposing excessive restrictions.

One of the proposed regulatory measures includes registering Initial Exchange Operators to ensure proper due diligence. This move would pave the way for public capital market offerings through security tokens, integrating blockchain technology into traditional finance.

Regarding secondary trading, the SECP presents three potential routes:

1. Trading on decentralized exchanges,

2. Licensing Digital Asset Trading platforms with custodial services, or

3. Allowing trading via the Pakistan Stock Exchange (PSX).

In a significant development, the State Bank of Pakistan (SBP) clarified that cryptocurrency is not banned in the country, a shift from its earlier 2018 advisory that discouraged banks and financial institutions from dealing with crypto. This updated stance signals a more open approach toward digital currency integration.

Overall, Pakistan appears to be moving toward establishing a comprehensive legal framework for cryptocurrencies, with a strong focus on innovation, transparency, and investor protection. The SECP is also inviting public feedback to shape future policy directions.