Pakistan takes action to pull the cryptocurrency boom out of the dark Reuters

Omar Faruk

Islamabad (Reuters)-Ghulam Ahmed, 38, takes time out of his cryptocurrency consulting business once a week to log in to a WhatsApp group with hundreds of members eager to learn how to mine and trade in Pakistan Cryptocurrency.

From housewives who want to earn a sideline income to wealthy investors who want to buy crypto mining hardware, many people have little understanding of the traditional stock market, but everyone is eager to profit from it.

Ahmed, 38, quit his job in 2014 and believes that mining is more profitable.

Pakistan has witnessed the prosperity of cryptocurrency trading and mining, and people have become interested in thousands of views of related videos on social media and transactions on online exchanges.

Although cryptocurrency is not illegal in Pakistan, the Financial Action Task Force (FATF), the global money laundering regulator, has called on the government to better regulate the industry. Pakistan was included on the FATF’s grey list for failing to inspect terrorist financing and money laundering activities.

In response, the federal government set up a committee to study cryptocurrency regulation, including observers from the FATF, federal ministers, and the head of the country’s intelligence agency.

“Half of the members didn’t know what it was, or didn’t even want to understand it,” said committee member Ali Farid Khwaja, a partner of Oxford Frontier Capital and chairman of Karachi stock brokerage KASB Securities. “But fortunately, someone set up this committee. The relevant agencies in the government that need to do things are supporting it, and the promising thing is that no one wants to hinder technological innovation.”

The governor of the country’s central bank, Reza Baqir, said in April that the authorities are studying cryptocurrencies and their potential to incorporate off-book transactions into the regulatory framework. “We hope to be able to make some statements on this in the next few months,” he told CNN. Baqir declined to comment to Reuters on the topic.

Even the education sector has become popular.

In February of this year, Lahore University of Management Sciences, one of the country’s leading universities, received a grant worth 4.1 million US dollars to study the technology of Stacks, a block that connects Bitcoin to applications and smart contracts. Chain network.

Legalization and investment

For cryptocurrency advocates, these initiatives have not come fast enough.

Institutions sometimes suspect people involved in cryptocurrency transactions, worrying that it may be related to money laundering.

Ahmed said he has been arrested by the Federal Bureau of Investigation (FIA) and charged twice with money laundering and electronic fraud, but these allegations have not been confirmed in court.

He said that on one occasion, the FIA ​​confiscated a cryptocurrency mine he had established in Khyber Pakhtunkhwa province in northern Pakistan, which relied on its own hydroelectric power. The FIA ​​did not respond to Reuters’ request for comment.

Waqar Zaka, a former TV host with more than 1 million fans on Youtube, has been lobbying officials for years not only to legalize the industry, but also to get the government to invest in it. Like Ahmed, Zhaka established a cryptocurrency mine that relies on hydroelectric power.

Now, the Khyber Pakhtunkhwa provincial government invites Zhaka and Ahmed to join a committee to study how to profit from such enterprises. In March of this year, the group announced that it was considering building a new mine using Zaka’s facilities as a template.

Despite the challenges, the cryptocurrency boom in Pakistan shows no signs of stopping.

Pakistan’s social media groups explained how to trade and mine cryptocurrencies, some of which have tens of thousands of fans on Facebook (NASDAQ:). On YouTube, cryptocurrency videos in Urdu have been viewed hundreds of thousands of times.

Most online cryptocurrency exchanges located outside Pakistan, such as Localbitcoins.com, list hundreds of Pakistani traders, some of whom have thousands of transactions.

According to the web analytics company, apps that track and trade cryptocurrencies like Binance and Binomo have downloaded more apps than some of the country’s largest banks. Similar sites (New York Stock Exchange:).

“You can’t stop encryption, so the sooner Pakistan regulates things and joins the rest of the world, the better,” Ahmed said.