KARACHI: The Sindh High Court has set up a committee to consider whether any form of cryptocurrency is to be permissible in Pakistan.

A two-judge bench headed by Justice Mohammad Karim Khan Agha said that the committee, to be headed by deputy governor of the State Bank, would send its recommendations to the federal finance secretary after considering all aspects. The bench made it clear that the decision whether or not to allow any form of cryptocurrency business in the country would be a policy decision which must be made by the federal government.

It also directed the Federal Investigation Agency (FIA) to act strictly in accordance with law in respect of those persons who might be seeking to indulge in the business of cryptocurrency. The bench asked all members of committee to appear before it on Jan 12 along with initial report regarding feasibility to introduce cryptocurrency.

When the bench took up a petition challenging a circular reportedly issued in by the State Bank in April 2018 to bar the use of virtual currencies, the officials of SBP and Securities and Exchange Commission of Pakistan (SECP) were in attendance and made submissions.

The bench in its order said, “it appears from the submissions made in court that prima facie at this point it is very difficult or indeed impossible to carry out business regarding cryptocurrency largely based on circulars issued by SBP”. They have stressed that use of such currency in any form is also a difficult task to regulate and currently no such regulation exist and under the law it has not even been made clear whether any trade in cryptocurrency, which is not legal tender, is allowable.

The bench noted that the FIA had registered cases against the persons transacting cryptocurrency business and crypto miners for being in violation of SBP circulars.

It appears to us that the first issue which needs to be decided is whether Pakistan will or will not allow any trade of any kind in cryptocurrency, it said and added that a number of countries were allowing trade and since Pakistan was a progressive country and needed to keep up with global banking practices it might want to consider the legality of certain types of cryptocurrency being transacted in the country provided that a proper regulatory framework was put in place.

Besides SBP deputy governor Seema Kamil, the committee will comprise the secretary or additional, secretary ministry of finance, the chairman or any senior officer of the SECP, chairman or a senior officer of the Pakistan Telecommunication Authority, secretary or any senior official of the ministry of information technology & telecommunication, director general financial monitoring unit of SBP and the petitioner Waqar Zaka, who is seeking to open a cryptocurrency exchange business in Pakistan, according to the order issued by the bench.

The bench said that the first meeting of the committee must be held on Oct 25 at the SBP office in Karachi and thereafter, meetings be held on a fortnightly basis.

The bench explained that the petitioner was in the committee only to assist it in making its recommendations to the ministry of finance on the viability of cryptocurrency.

It warned that the meetings of the committee, minutes and all documents and other material discussed must remain confidential.

Published in Dawn, October 22nd, 2021