Pakistan’s State Bank (SBP) has issued a statement which confirms that financial companies are now barred from working with cryptocurrency firms in the country.
The SBP website’s statement confirmed that all banks in Pakistan “are advised to refrain from processing, using, trading, holding, transferring value, promoting and investing in virtual currencies or tokens… any transaction in this regard shall immediately be reported to the Financial Monitoring Unit (FMU) as a suspicious transaction”.
Pakistan’s FMU sees its goals as developing a strong reporting culture amongst financial institutions, making a contribution towards fighting money laundering and terrorist financing. It also sees itself as a recognized model of financial intelligence gathering, analysis and dissemination in Pakistan.
In the wake of this announcement, there has already been an impact on the industry in Pakistan. Urdubit, an exchange which was first launched in 2014, has shut down. Users attempting to access the platform today will be greeted with a screen message, “Urdubit is Shutting Down”, warning its users to withdraw their funds “as quickly as possible” due to a “State Bank of Pakistan prohibition on dealing with virtual currencies”.
Rodrigo Souza, co-founder of BlinkTrade, the provider of Urdubit’s open source software, suggests that governments and banks will fight Bitcoin due to a potential run on the central bank.
The news of Pakistan’s curb on cryptocurrency trading comes just a day after India’s announcement on Thursday that The Reserve Bank of India (RBI) was now strictly prohibiting all banks and regulated financial entities in dealing with cryptocurrencies. On the news of India’s announcement, the price of Bitcoin plummeted to a low of 350,000 Pakistani Rupees (USD 5,392) against its international market price of USD 6,617 according to cryptocurrency exchange Coinome.
Following yesterday’s ban the Pakistani government has indicated that those using cryptocurrencies to transfer funds outside Pakistan could be prosecuted. The SBP declared “no entity is currently licensed or authorized by SBP to offer money remittance services and products in Pakistan using virtual currencies/coins/tokens”.