January 13, 2022: Pakistan's central bank has recommended banning cryptocurrency, arguing in documents submitted in an ongoing court case that allowing it would cause capital flight.
The Sindh High Court has been hearing a constitutional petition filed in 2019, which seeks to overturn central bank guidance from 2018 advising banks and payment system operators against processing and investing in virtual currencies.
The court sought advice from a committee headed by a deputy governor of the central bank, which submitted its report on Wednesday.
“The State Bank of Pakistan has concerns over the trading of cryptocurrencies by individuals and entities, as it results in outflow of foreign exchange from the country,” the committee wrote in the report, reviewed by Reuters.
It noted that cryptocurrencies were all issued outside of Pakistan, and said Pakistani residents buying such tokens would send capital abroad.
“After a careful risk-benefit analysis, it emerged that risks of cryptocurrency far outweigh its benefits for Pakistan,” the report said.
Pakistan has been grappling with a currency devaluation, high inflation, current account deficit and dwindling foreign reserves.