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Pakistan weighs “National Crypto Council” for digital currency adoption

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Key Takeaways:

  • Pakistan is reportedly considering setting up a “National Crypto Council” to study the possibility of legalizing cryptocurrencies.
  • It came after a meeting between the Finance Minister and advisors associated with Donald Trump.
  • The council aims to develop policies and address regulatory challenges in the crypto space.

Pakistan, a country home to a large population of crypto enthusiasts, appears to be making a sharp turn in its attitude towards digital currencies. According to reports, the Finance Ministry is also looking at the possibility of setting up a “National Crypto Council” that would be tasked with exploring how cryptocurrencies can be legalized in the country. This represents a significant shift, especially considering the previously staunch opposition from government entities.

A Shift in Policy

The change of heart comes after a foreign delegation met with Finance Minister Muhammad Aurangzeb. What makes this gathering particularly notable is the presence of those described as advisors close to former U.S. President Donald Trump. It included discussions about the global evolution of cryptocurrency, its intensifying adoption, and regulatory frameworks adopted worldwide — perhaps reflecting the trend of the U.S. government’s evolving crypto policies.

With names like Gentry Beach Jr., a business partner of Trump, Nikita Goldsmith, a tech entrepreneur, Alex Malkov, a consultant for blockchain companies, and Jerad Finck, the CEO of Cosmic Wire in attendance, we may see some alignment toward a more crypto-friendly opportunity emerging in the next few years. The visit was unannounced, and the lack of an official statement from the U.S. Embassy has led to speculation.

The establishment of such a council can be seen as Pakistan’s effort to leverage opportunities in digital assets, attract foreign direct investment (FDI), and modernize its financial sector.

The National Crypto Council: A Deep Dive

It would be made up of key government officials, regulatory bodies, as well as experts from the financial industry under the proposed National Crypto Council. It would also be responsible for policy making, overcoming regulatory hurdles, and building a safe and sustainable crypto ecosystem. Most importantly, the council would also seek to work with other countries to develop standardized regulatory frameworks for international digital economic participation.

Aurangzeb has stressed the importance of a properly regulated structure for digital assets following international best practices and complying with Financial Action Task Force (FATF) guidelines. It would also work to modernize the nation’s financial sector with blockchain technology, the council said.

Acknowledging the Past, Embracing the Future

It is significant to note that this potential embrace of cryptocurrency is in marked contrast to past positions. As recently as January 2022, the State Bank of Pakistan (SBP) tried to ban all such digital currencies, and former finance officials announced they would never be legalized. The Finance Minister’s statement encouraging a more “open mind” towards legalization marks an actual shift.

This cautious yet forward-thinking approach reflects a willingness to learn from global trends and adapt the regulatory framework to an evolving digital finance ecosystem.

Unlocking the Potential of Tokenization

Among other things, those discussions have included the “tokenization of key infrastructure and state-owned enterprises (SOEs) assets.” This could improve liquidity, accessibility, and efficiency in capital markets. The goal here is to unlock value and attract investment by representing real assets on the blockchain, so they become more accessible and easier to manage.

Consider, for example, a major infrastructure project in Pakistan partially financed via the tokenization of future toll revenues. These tokens could be bought by international and local investors alike to essentially invest in the success of the infrastructure. This is an example of how crypto can unlock new investment models.

Addressing the Challenges

Pakistan already boasts a large crypto community, with estimates of over 20 million active users. Yet, these individuals now find themselves facing obstacles, such as expensive transaction fees and ambiguous regulatory guidance. Aurangzeb said he was committed to tackling these issues through suitable frameworks, legislation and incentives to promote transparency and encourage the growth of digital business.

The cryptocurrency industry and representatives of leading industry players want to come together to create a comprehensive policy framework that can balance security, transparency, compliance with regulations, and economic efficiency, while preventing financial crimes and other illicit activities.

Global Parallels: Something Broader

Pakistan’s potential legalization of cryptocurrency aligns with a broader global trend. Regulation within the crypto industry has been increasing in countries such as the United States, European nations, and the United Arab Emirates, with the goal of promoting innovation while enhancing consumer protection.

In the United States, for example, there is ongoing debate over the appropriate level of cryptocurrency regulation. Some are pushing for a light-touch approach that fosters innovation, while others are opting for stricter rules to protect investors and deter illegal activities.

The Trump Connection: More Than Meets the Eye?

There is an interesting layer to this story involving figures connected to Donald Trump. Trump was skeptical of cryptocurrencies during his presidency. However, he has reversed his stance, even endorsing a memecoin associated with his brand.

More News: Trump Promotes Memecoin on X

This marks a departure from the previous political consensus on crypto, as well as an acknowledgment of its emerging economic and political importance.

A Cautious Path Forward

The potential establishment of the National Crypto Council is a bright spot for the crypto community of Pakistan, but we must keep in mind that things are still very early. This is a cautious, forward-looking approach by the government.

The Finance Division noted that all subsequent steps in the field of digital assets should be in line with national interest, guidelines of the Financial Action Task Force (FATF), and global financial norms. This tempered stance shows a larger intent to temper the novelty of cryptocurrency with the gravity of its impact on possible stability.

More News: SEC Forms Crypto Task Force Led by ‘Crypto Mom’ Hester Peirce – A Shift in Crypto Regulation

Real-World Implications

Its legalization can have far-reaching consequences for Pakistan’s economy and its citizens, which could lead to attracting foreign investment, economic growth in the technology sector, and ultimately offering new opportunities for financial inclusion in the country.

Consider, for example, a simple yet profound scenario where a farmer based in Pakistan could use cryptocurrency to gain direct access to international markets, sidestepping traditional intermediaries and minimizing transaction costs. Or a local business owner in a remote village could use crypto to receive payments from international clients, allowing them to participate in the global economy.

In the end, Pakistan’s journey into cryptocurrency will require a novel regulatory touch, one that promotes growth without losing sight of the need for consumer protection measures and preventing money laundering.

This article first appeared at CryptoNinjas

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