PHC Orders Urgent Action: Will the Government Finally Create a Cryptocurrency Policy?

The Peshawar High Court (PHC) directed the federal government of Pakistan to prepare a full-fledged policy to address illegal cryptocurrency trading and digital currency enterprises within two months. This follows a petition brought by Barrister Huzaifa Ahmad, raising an alarm on the absence of regulation covering the application of digital currencies in the nation, particularly in Khyber Pakhtunkhwa.

Background of the Case

The issue of illicit cryptocurrency dealing and digital currency enterprise has been growing in Pakistan. Despite a 2018 State Bank of Pakistan (SBP) regulation making the sale of cryptocurrencies an illegal activity, numerous individuals continue to engage in such business on the internet. Barrister Huzaifa Ahmad, who was appearing in a pro se capacity, pointed out that there is no legal regime in Pakistan for the regulation of digital currencies and that this situation has been exacerbated by the failure to enforce the SBP directive.

Illegal Cryptocurrency Activities and the Threat to National Security

According to the petition, cryptocurrency trading is not just rampant in online channels, but also prevalent through physical institutions like coaching centers and training academies, particularly in Khyber Pakhtunkhwa. These institutions offer courses on Bitcoin and forex trading and advertise their services on social media platforms like TikTok, Facebook, and YouTube. The petitioner expressed concerns about the increasing use of these platforms for illegal trading and money laundering. He warned that such activities could potentially be used for financing terrorism and other anti-state activities, making it a threat to national security.

Implications for Pakistan’s Cryptocurrency Landscape

The recent ruling by the PHC is an important step toward a rapidly emerging concern about cryptocurrency trading in Pakistan. It could lead to efforts by the government to develop a policy that would ensure clarity and sound regulatory frameworks about digital currency. This would provide a legally protected mechanism for cryptocurrency transactions while protecting against unlawful activity such as money laundering, terrorist financing, and tax evasion. Also, enforcing such a policy could provide a mechanism for regulating coaching centers and other institutions that engage in acts dealing with digital currencies, ensuring that their efforts to trade digital currencies fall within the remedies of law. 

This ruling could likely have important ramifications for cryptocurrency trading in Pakistan. If the government adopts regulations beyond merely enforcing the court’s rulings, the proposed policy, if adopted, could mean that cryptocurrency is formally recognized in the country, influencing potential innovation in blockchain and digital currency sectors. However, the success of the proposed policy will be dependent upon timely, effective, and transparent enforcement.

Conclusion

The decision of the PHC emphasizes the increasing need for regulatory oversight in Pakistan’s cryptocurrency market. With the government feeling some political pressure to create a clearer policy, the next few months are critical to determining how cryptocurrency is regulated in Pakistan. The court’s decision is an indication to showcase that it is serious in combating the illegal use of cryptocurrency while simultaneously allowing the government to formulate a measured framework with which to better regulate digital currency. Therefore, this case is an important incident in the context of Pakistan’s digital economy and how it engages with growing technologies.