KARACHI: Considering cryptocurrency to be “a tool for money laundering”, the Karachi-based Federal Investigation Agency (FIA) recently announced its intention to clamp down on cryptocurrency dealers in Pakistan.
The FIA wrote to the Pakistan Telecommunication Authority (PTA) demanding that around 1,600 identified websites related to crypto trading be brought down. A significant operation to detain and arrest those associated is also on the cards.
Pakistan’s hostile stance towards cryptocurrency stands unchanged since 2018 when the State Bank of Pakistan declared them to be “illegal”. The Federal agency also sent a notice to the world’s largest cryptocurrency exchange Binance, citing an alleged scam that had duped many citizens of around 100 million rupees and asking the organisation to explain its linkage with at least 11 mobile applications associated with the fraud.
Per the FIA press release, “People from all over Pakistan contacted FIA Cyber Crime Sindh through social media and disclosed about at least 11 mobile applications namely MCX, HFC, HTFOX, FXCOPY, OKIMINI, BB001, AVG86C, BX66, UG, TASKTOK, and 91fp that these applications have stopped working over a period of time and have defrauded Pakistani people of billions of rupees”.
The details further revealed that each of these applications (HFC) had an average of 5,000 customers, with the maximum number going as high as 30,000.
The letter received by PTA also sought the telecommunications agency’s help to take legal action against those who were actively involved in running such operations, along with stating that it has initiated the compilation of such dealers.
This comes in the wake of almost $20 billion strong cryptocurrency investments present in the country, per research conducted by the Pakistan Chamber of Commerce and Industry. Notably, this is only slightly lower than the country’s foreign exchange reserves, which stood at around $24.02 billion as of January 2021.
Per Federal Science and Technology Minister Shibli Faraz, “gullible people were turning to cryptocurrency without adequate knowledge and understanding of the consequences of investing in crypto”. He called for systemic government control over this asset class for protection and transparency, something that the government, State Bank, and Securities and Exchange Commission of Pakistan are jointly working on.
However, the reception to blockchain technology has mostly been positive, with the country currently running blockchain pilot projects in three higher educational institutions, namely Lahore College of Management Studies, Qaid-E-Azam University, and Information Technology University, Lahore.
Ranking third in the Chainalysis Global Cryptocurrency Adoption Index 2021, just behind India and Vietnam, Pakistan’s vernacular media reported that the country had bought crypto worth 5 crores in Pakistani rupees in the second half of 2021, with around 1,064 people in the country carrying out an approximate of 2,923 transactions. Out of these, an estimated 1,054 accounts have already been frozen by the FIA.
