State Bank of Pakistan, the country’s central bank, has recently banned cryptocurrency trading and initial coin offerings (ICOs). The rash decision of the bank could become a major mistake for Pakistan’s economy moving forward.
Mistake
On April 6, the State Bank of Pakistan announced that local financial institutions, banks, and credit card service providers are not allowed to be involved in the cryptocurrency market in any way, and are not allowed to process cryptocurrency transactions, promote, and invest in the cryptocurrency market. It completely dismissed its local cryptocurrency market.
Pakistan’s ban on cryptocurrencies has virtually no impact on the global cryptocurrency market, given that the Pakistan cryptocurrency market does not even account for 0.1 percent of the global cryptocurrency market. But, Pakistan has made an error in dismissing overseas blockchain companies that could potentially expand into or relocate to countries like Pakistan for cheaper resources.
Throughout 2018, many of the major economies internationally including South Korea, Japan, and the US have embraced the cryptocurrency market. The three countries have imposed practical regulations for cryptocurrency exchanges and investors, and Japan has already introduced its intention to legalize initial coin offerings (ICOs).
The South Korean government and the Financial Services Commission (FSC) released its plans to legalize domestic ICOs once again,
Earlier this year, Kakao, South Korea’s largest internet conglomerate which manages KakaoTalk, KakaoPay, KakaoTaxi, KakaoStory, and other massively popular applications in the country, teased its plan to launch a blockchain venture and an ICO outside of the country, due to the strict policies of South Korea. Consequently, the South Korean government stated that it may allow domestic ICOs, if they are approved by local financial authorities.
While major economies are scrambling to regulate the cryptocurrency market, small economies like Pakistan and Vietnam have completely shut out the cryptocurrency market, rejecting users, investors, and businesses, and possibly billions of dollars.
