International players have called on Pakistan’s government to regularise cryptocurrency trade to stop fraud and capital flight.

At present, there is irregular trade in cryptocurrency with estimated annual volume of around $20 billion.

One of the key global players, RAIN, the first licenced crypto asset company, suggested that the government should tax crypto assets and frame relevant regulations.

“No country or individual can stay away from the upcoming digital trends and developments,” said RAIN Director Public Policy Aatiqa Lateef.

Briefing media on the importance of crypto assets in the modern economy, Lateef said that relevant officials from 44 developing and underdeveloped countries were meeting in El Salvador to discuss crypto asset regulations.

“Cryptocurrency or crypto asset, as it is called in varying ways in different jurisdictions, has been largely adopted by advanced economies,” she added. “But the El Salvador meeting is to discuss the best regulatory framework for the less advanced economies.”

Speaking on the occasion, RAIN GM Pakistan Zeeshan Ahmed said there was a potential for revenue of around $90 million if capital gains tax was imposed on crypto assets.

The official said that the “West has acknowledged that crypto assets continue to be traded in grey areas; in the same way, it’s been trading in Pakistan”.

“We suggest that as Europe has done so and Gulf countries have recognised it, Pakistan too should tax and regulate crypto assets,” he added.

Pakistan ranks in the third slot globally in crypto subscription and its use is growing rapidly.

RAIN executives, in a meeting with officials of the finance ministry, underlined the initial capacity building needed for regulators, which was the biggest challenge, as “crypto is a new arena, without the requisite due diligence and technical guidance”.

Additionally, the ministry was informed that Pakistanis were vulnerable to fraud while trading crypto assets through irregular means.

Furthermore, over 8,000 cryptocurrencies are being traded in the dark web – a majority of which are fraudulent and do not provide any protection to investors, therefore recognition of this activity is needed.

The Sindh High Court has directed the Ministry of Law and the Ministry of Finance to finalise the matter.

Earlier, the Securities and Exchange Commission of Pakistan and the State Bank of Pakistan decided to disown cryptocurrency on the ground that it could invite the ire of the International Monetary Fund (IMF) and the Financial Action Task Force (FATF).

Published in The Express Tribune, May 18th, 2022.

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