Značka: Pakistan

Law Decoded: First-mover advantage in a CBDC conversation, Jan. 10–17

Last week saw an unlikely first move in the opening narrative battle around a prospective U.S. central bank digital currency: Congressperson Tom Emmer came forward with an initiative to legally restrict the Federal Reserve’s capacity to issue a retail CBDC and take on the role of a retail bank. This could be massively consequential as we are yet to see a similarly sharp-cut expression of an opposing stance. As a matter of fact, it is not even clear whether other U.S. lawmakers have strong opinions on the matter other than, perhaps, condemning privately issued stablecoins as a digital alternative to the dollar. By framing a potential Fed CBDC as a privacy threat first, Emmer could tilt the conversation in the direction that is friendly to less centralized designs of digital money.Below is the concise version of the latest “Law Decoded” newsletter. For the full breakdown of policy developments over the last week, register for the full newsletter below.U.S. representative vs. U.S. CBDCThe tension between decentralized digital money and state-issued CBDCs is at the heart of the ongoing global shift toward digital payment rails. Last week marked the first-ever instance of a sitting U.S. member of Congress taking a formal stance against the Federal Reserve’s potential retail CBDC move.Sovereign digital fiat will undoubtedly be more convenient than its analog predecessor, yet the privacy costs of such convenience might be enormous. If all money is CBDC, the government’s financial surveillance capacity will become virtually unlimited, denying people the anonymity that cash transactions once afforded. Representative Emmer cited these privacy concerns as a rationale for introducing the bill that would ban the Fed from issuing a CBDC directly to consumers and acting as a retail bank.While it may take a long time before Emmer’s initiative reaches the House floor, the mere articulation of such a position by a member of Congress can have a significant impact on the course of the policy conversation around a potential CBDC. This is especially true in the light of some top Fed officials’ stated willingness to defer to Congress on the issue.Another ban scare, another El SalvadorElsewhere in the world, the signals that various regulators have been sending over the past week ran the gamut from potentially banning crypto transactions in Pakistan to considering the replication of El Salvador’s Bitcoin-as-legal-tender move in Tonga. Pakistan’s drive toward a blanket ban follows a familiar scenario where it is the nation’s central bank that is actively committed to outlawing crypto transactions and penalizing crypto exchanges. The task of determining the legal status of cryptocurrencies fell to the High Court of the province of Sindh, yet the judges refrained from making the final call and passed the issue on to the specialized government ministries. On the opposite side of the regulatory spectrum, the island nation of Tonga could be embarking on the Bitcoin adoption trail soon. An announcement by Lord Fusitu’a, a former member of the Tongan parliament and chairman of several regional interparliamentary groups, suggested that the country could make Bitcoin legal tender as soon as late 2022. Given Tongans’ heavy reliance on remittances, replicating El Salvador’s move almost identically seems logical.IMF sees the demise of crypto’s hedge roleAmong many risk factors that analysts ascribed to digital assets over the years, the financial stability risk that stems from crypto’s growing correlation with equity markets comes across as a novel talking point. Yet this is what a group of the International Monetary Fund researchers concluded upon examining the dynamics of Bitcoin to S&P 500 index correlation. The authors argued that the growing interconnectedness between the two asset classes defeats crypto’s hedge function, as it no longer serves to diversify investors’ risks. The IMF analysts’ conclusions come down to a reasonable notion that there should be a global, coordinated approach to crypto regulation.

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Pakistan's president calls for more training in blockchain technology

Arif Alvi, currently serving as the president of Pakistan, called for additional training in emerging technologies including blockchain, artificial intelligence, and cybersecurity while meeting with a delegation of blockchain technology experts.In a Monday announcement, Alvi said Pakistan’s talent pool should be ready to meet the needs of the Fourth Industrial Revolution, which included utilizing blockchain technology in the public and private sectors. According to the Pakistan president, the technology could be used as a government tool to track transactions, reduce corruption, and increase transparency. Among the panel of experts was Bitcoin SV advocate Jimmy Nguyen, founding president of the Bitcoin Association.President Dr. Arif Alvi had a meeting with an international delegation of blockchain experts, led by the Founding President of BSV Blockchain Association, Mr. James Nguyen, that called on him, at Aiwan-e-Sadr. pic.twitter.com/G4m4fRpJJy— The President of Pakistan (@PresOfPakistan) January 17, 2022The meeting came shortly before the Pakistan president announced he would be appointing Noor Muhammad Dummar as the senior minister of finance for the country’s Balochistan province. Pakistan’s federal ministries of finance and law have not legislated on a potential blanket ban of cryptocurrencies in the country, but the State Bank of Pakistan has reportedly argued cryptocurrencies like Bitcoin (BTC) are illegal and cannot be used for trading.A report released by crypto analytics firm Chainalysis in October 2021 showed that Pakistan had the third highest rate of crypto adoption behind Vietnam and India, with transfers of more than $10 million in the country representing 28% of transactions. The country’s central bank also said in 2021 it was studying the possible rollout of a Pakistan central bank digital currency. Related: Pakistanis have $20B in crypto assets, says head of local associationHowever, some officials within Pakistan seem to continue to associate digital assets with fraud following a multi-million dollar crypto scam in which investors were misled into sending funds from Binance wallets to unknown third-party wallets — some reports suggest investors lost as much as $100 million. The Pakistan Telecommunication Authority has also reportedly blocked websites dealing in cryptocurrencies in an effort to prevent fraud and money laundering.

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Pakistan’s central bank reportedly wants to ban crypto

The State Bank of Pakistan (SBP) is reportedly seeking to ban all cryptocurrency transactions in Pakistan.Pakistan’s Sindh High Court reportedly held a hearing related to the legal status of cryptocurrencies in the country, in which several Pakistani authorities, including the SBP, submitted a document to the court, arguing that cryptocurrencies like Bitcoin (BTC) are illegal and cannot be used for trade. According to local news channel Samaa TV, the document cited at least 11 countries, including China and Saudi Arabia, that have opted to ban cryptocurrencies. The Pakistani central bank reportedly urged the court not only to ban cryptocurrency activity but also to impose penalties against crypto exchanges.The SBP also referred to several investigations against crypto exchanges by the Federal Investigation Agency (FIA), citing investor protection risks as well as money laundering and terrorism concerns. As previously reported, the FIA started a criminal investigation against Binance, the world’s largest crypto exchange, in early January, alleging a possible linkage to a multi-million-dollar crypto scam in the region.Despite the SBP recommending a blanket ban on crypto, the Sindh High Court has not ordered a ban on crypto transactions in Pakistan just yet. Instead, the court has ordered that the bank’s appeal be sent to the finance and law ministries, which will make a final determination on the legal status of cryptocurrencies in the country and ascertain whether a crypto ban would be constitutional.The news comes years after the SBP issued an initial prohibition on dealing in digital currencies and tokens back in April 2018. At the time, the central bank argued that cryptocurrencies such as Bitcoin or initial coin offerings were not legal tender and were not “issued or guaranteed by the government of Pakistan.”SBP did not immediately respond to Cointelegraph’s request for comment. This article will be updated pending new information.Related: The number of countries banning crypto has doubled in three yearsThe latest moves by the Pakistani government echo similar events developing in many countries, including India and Russia, where the central banks are trying hard to ban crypto, while other parts of the government are not necessarily inclined to such a ban. In 2020, India’s ​​central bank had to lift its ban on banks’ dealings with crypto-related firms in accordance with an order by the country’s Supreme Court.

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Pakistan to investigate Binance for multi-million dollar crypto scam

Pakistan’s Federal Investigation Agency (FIA) reportedly issued a formal notice to crypto exchange Binance in an effort to identify links around a multi-million crypto scam in the region. The government of Pakistan started a criminal investigation after receiving numerous complaints against an ongoing scam that involved misleading investors into sending funds from Binance wallets to unknown 3rd-party wallets. According to local coverage, the FIA’s Cyber Crime Wing has issued an order of attendance to Binance Pakistan’s GM Hamza Khan to identify the exchange’s link to “fraudulent online investment mobile applications.”KARACHI: Federal Investigation Agency (FIA) has detected an online fraud of Rs100 billion using a cryptocurrency and issued notice to the local representative of Binance, @cz_binance @binance @BinanceHelpDesk @BinanceUS pic.twitter.com/3oukwzmDqh— Innocent Pashteen✌ (@FighterDawar) January 7, 2022“A relevant questionnaire has also been sent to Binance Headquarters Cayman Islands and Binance US to explain the same,” read the notice. The investment frauds in Pakistan were carried out by asking users to register on Binance and transfer funds to 3rd-party wallets under the pretext of unrealistic returns. According to the FIA notice:“These schemes benefit old clients at the cost of new clients and ultimately disappear when they have made substantial capital base worth billions of rupees.”Based on the complaints raised by the citizens, the Pakistani agency identified at least 11 fraudulent mobile apps that suddenly stopped working after successfully stealing the user’s funds. The apps identified by FIA are MCX, HFC, HTFOX, FXCOPY, OKIMINI, BB001, AVG86C, BX66, UG, TASKTOK and 91fp.In addition to directing users to sign up on Binance to transfer the funds, the fraudsters added the victims on a Telegram group for providing “expert betting signals.” Each application hosted around 5,000 customers on average. The notice added:“At least 26 suspect blockchain wallet addresses (Binance wallet address) have been identified where fraudulent amount may have been transferred. A letter has been written to Binance Holdings Limited to give the details of these blockchain wallet accounts as well as to debit block them.”Binance has also been asked for details including official supporting documents and integration mechanism of the APIs that were used by the fraudsters to connect with Binance’s services. While the FIA has proactively blocked the bank accounts that were linked to the suspicious apps, the notice warned:“In case of non-compliance, FIA Cyber Crime will be justified to recommend financial penalties on Binance through the State Bank of Pakistan.”Binance has not yet responded to Cointelegraph’s request for comment.Related: Pakistanis have $20B in crypto assets, says head of local associationIn December 2021, the president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Nasir Hayat Magoon revealed that Pakistani citizens hold a combined crypto assets value of $20 billion.As Cointelegraph reported, the FPCCI president confirmed the numbers based on a research paper released by the chamber. Supporting the claim, the 2021 Chainalysis Global Crypto Adoption Index ranked Pakistan the third highest in terms of index score behind Vietnam and India.

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Pakistanis have $20B in crypto assets, says head of local association

Nasir Hayat Magoon, The President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), has stated that Pakistani citizens have a combined crypto assets value of $20 billion.During a news conference, the FPCCI president said that Pakistanis’ digital currency valuations are based on the chamber’s research paper, as per a local report. He urged the government to implement a cryptocurrency policy, pointing out that India has implemented some restrictions in this field, the report adds. In October, a study published by Chainalysis revealed that Pakistan had experienced a tremendous increase in cryptocurrency adoption during the previous year. The 2021 Chainalysis Global Crypto Adoption Index ranked Pakistan the third highest in terms of index score behind Vietnam and India. The ranking is based on three metrics: on-chain crypto value transmitted, on-chain retail value transferred, and peer-to-peer exchange trade volume.Related: New survey reveals 83% of millennial millionaires now own cryptoOn October 20, 2021, Pakistan’s Sindh Province’s highest judicial body urged the federal government to provide modalities for cryptocurrency regulation. The High Court of Sindh (SHC) ordered government bodies such as the Ministry of Information Technology and Law to collaborate with regulators like the Securities and Exchange Commission of Pakistan (SECP) and the central bank to create crypto rules within three months.The SECP has been considering crypto legislation since November 2020, as reported by Cointelegraph. Apart from cryptocurrency regulation, the governor of Pakistan’s State Bank of Pakistan, Reza Baqir, stated that the bank analyzes the possibilities of a central bank digital currency.

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