The highest judicial institution of the Pakistani province of Sindh has requested the federal government alongside the Federal Investigation Agency (FIA) and the State Bank of Pakistan (SBP) to submit a detailed reply on the ban on cryptocurrency dealing in the country, local media reported Wednesday.
The court hearing is coming after it took up a petition against the ban imposed in April 2018 by the SBP, the country’s central bank.
In a circular issued in 2018 on the “prohibition of dealing in virtual currencies/tokens,” the SBP “advised” all banks, financial institutions, and payment processors to refrain from using cryptocurrencies or rendering any services to account holders who are involved with crypto.
The SBP declared all forms of digital currencies illegal, noting that cryptocurrencies like Bitcoin, Litecoin, Onecoin, and ICO tokens are not legal tender, nor are they issued or guaranteed by the government.
The apex bank further warned that institutions should report all crypto-related transactions as suspicious.
The SBP’s ban came when the central bank of India, a neighboring country, imposed similar measures on cryptocurrency activities prohibiting commercial banks from dealing with crypto.
While the ban made things hard for Pakistanis, it did not completely stop them from trading or using cryptocurrencies.
Crypto traders used alternative methods such as P2P trading platforms like Localbitcoins to boycott commercial banks, thus rendering the ban less effective.
Heading the bench hearing today, Justice Muhammad Iqbal Kalhoro was not pleased with the SBP’s ban on cryptocurrencies. He noted that Pakistan is still far behind in modern technology compared to the rest of the world.
Justice Kalhoro then asked why digital currencies are prohibited in Pakistan when they are being used globally. An SBP lawyer replied that there’s no ban on cryptocurrency, but it has not been regulated.
“If using digital currency doesn’t constitute an unlawful act, why is it not being allowed?” Justice Kalhoro asked further while seeking answers as to why cryptocurrencies are not yet regulated in the country.
The court has now requested the federal government, the SBP, and the FIA to submit their response to the petition on November 5.
Crypto traders in Pakistan now hope for a reversal on the SBP-imposed ban, just like India’s Supreme court lifted the 2018 RBI cryptocurrency trading ban earlier this year.