Pakistan warms up to digital assets with new bill

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A new proposed bill in Pakistan has paved the way for the country to issue a central bank digital currency (CBDC) and laid the foundation for using digital currencies.

The federal government proposed amendments to the State Bank of Pakistan (SBP) Act, legalizing digital currencies in the South Asian nation. Local daily Express Tribune, citing sources within the government, reported that the bill has been forwarded to the federal cabinet for vetting, after which it will be sent to parliament for ultimate approval. The Ministry of Law has already vetted the bill and given it its green light.

While it proposes a raft of changes to running the country’s central bank, one of the standout proposals is on digital currencies. The Pakistani government has historically been anti-BTC, but the bill signals a massive shift in this stance.

The bill proposes to legalize digital currencies as legal tender for the first time. However, it defines digital currencies as “a digital form of currency issued by the [central] bank.”

The sources, who requested anonymity as the amendments have yet to be made public, didn’t disclose whether the bill specifically mentions public digital currencies.

If it extends to digital currencies, it would mark a great shift in policy for the SBP. The bank has been against digital currencies for years, alleging that they facilitated crime as they are anonymous (which, of course, isn’t the case). Last year, the then-Finance Minister Aisha Ghaus Pasha claimed that Pakistan would ban digital assets to maintain its good standing with the Financial Action Task Force (FATF), which had just taken the country off the dreaded Grey List. Pasha has since been replaced by the pro-digital assets Muhammad Aurangzeb.

Despite the lack of clarity, Pakistan is one of the world leaders in digital asset adoption. It ranked ninth in this year’s Chainalysis rankings as Central & Southern Asia and Oceania (CSAO) dominated the rankings, grabbing five of the top ten spots.

Away from digital assets, the amended bill offers legal clarity for SBP’s CBDC activities. Under the top bank’s functions, the bill allows it to issue the Pakistani rupee “in physical or digital or both forms.” SBP has been exploring a digital rupee for at least five years and expects to launch a pilot project next year.

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