State Bank of Pakistan (SBP) has officially banned the country’s financial firms from cooperating with cryptocurrency companies. SBP has thus become the latest organization of its class to ban the crypto-related activities.
On the 6th of April, 2018, SBP issued the following statement: “All Banks/ DFIs/ Microfinance Banks and Payment System Operators (PSOs)/Payment Service Providers (PSPs) are advised to refrain from processing, using, trading, holding, transferring value, promoting and investing in Virtual Currencies/Tokens. Further, banks/DFIs/Microfinance Banks and PSOs/PSPs will not facilitate their customers/account holders to transact in VCs/ICO Tokens. Any transaction in this regard shall immediately be reported to Financial Monitoring Unit (FMU) as a suspicious transaction.”
The bank also announced the news on its Twitter.
So far, SBP has not issued any comments on this statement, while the announcement of the news has already set the wheels of change in motion and has had an immediate effect on Pakistan’s cryptocurrency market.
Pakistan’s first cryptocurrency exchange, Urdubit, said, after the SBP statement was issued, that it is going to shut down. The exchange was launched in 2014 and was meant to lay foundations to the wider adoption of cryptocurrency in the country. Urdubit’s goal was also to raise the people’s awareness and understanding of cryptocurrency and enable them to use bitcoin in their everyday lives. Zain Tariq, one of the exchange’s founding partners, said: “You have to realize that even wealthy Pakistani people fear what they don’t understand, and English being second language – it creates a small understanding barrier.”
However, after SBP has announced its decision, Urdubit published an announcement via Facebook, urging the users to withdraw their funds as soon as possible, because it will be closing soon, “due to the current stance on Virtual Currencies by SBP”. The exchange also attached a link to a notification from SBP stating that “SBP has not authorized or licensed any individual or entity for the issuance, sale, purchase, exchange or investment in any such Virtual Currencies/Coins/Tokens in Pakistan.” The notification also contains a warning that “Any transaction in this regard shall immediately be reported to Financial Monitoring Unit (FMU) as a suspicious transaction”.
Rodrigo Souza, co-founder of BlinkTrade, the provider of open-source software used by the Urdubit exchange, stated that SBP’s objective is to undermine the investment in cryptocurrency in Pakistan. According to Souza, the banks and the governments will inevitably fight Bitcoin because Bitcoin investment causes large number of people to remove their funds from the bank. Regarding the future plans, Souza added: “We are working hard to return all PKR to all our customers before our bank shutdown our accounts.”
Interestingly, Bank of Pakistan’s ban was announced the very next day after the Reserve Bank of India (RBI), the country’s main banking institution, announced its decision to stop working with the crypto exchanges and other services related to cryptocurrency. India’s cryptocurrency exchanges, however, have decided to challenge RBI’s edict. Ajeet Khurana, the chief executive of Zebpay, India’s leading cryptocurrency exchange, posted on his Twitter: “No way I am stopping. We will continue to do what is best for our customers, and what is best for our country. Am studying the present situation and will react shortly. And we will emerge stronger.”