1. MOHAMMAD KARIM KHAN AGHA, J.---In essence the petitioner wants to open the business concerning crypto currency exchange in Pakistan. We had noted vide order dated 20.10.2021 that prima facie at this point in time, it is very difficult or indeed impossible to carry out business concerning crypto currency largely based on circulars which were issued by State Bank of Pakistan.
2. The State Bank of Pakistan had candidly conceded that crypto currency is not legal tender in Pakistan. They have stressed that the use of the crypto currency in any form is also a difficult task to regulate and that at this point in time no such regulations exist and that under the law it has not even been made clear whether any trade in crypto currency which is not legal tender is allowable.
3. In this regard, it was noted that the FIA has lodged FIRs against persons transacting crypto currency business and crypto miners for being in violation of State Bank of Pakistan circulars.
4. In the aforesaid order we had come to the conclusion that the first issue which needed to be decided Was whether Pakistan would or would not allow any trade/transaction of any kind in crypto currency. We had noted that a number of countries are allowing such trade and since Pakistan is a progressive country and needs to keep up with global banking practices it might want to consider the legality of certain types of crypto currency being transacted in this country provided that a proper regulatory frame work was put in place. We had also noted that since use of crypto currency is a relatively new form of banking/business transaction and much thought and consideration needs to be taken as to whether any form of crypto currency is to be permissible we had set up a committee to be chaired by Ms. Seema Kamil Deputy Governor, State Bank of Pakistan which also comprised the Secretary or Additional Secretary, Ministry of Finance, Chairman SECP or any senior officer, Chairman PTA or any senior officer, Secretary or any senior officer, Ministry of Information and Technology, Director General, Financial Monitoring Unit (FMU), State Bank of Pakistan and the petitioner Mr. Waqar Zaka, who is seeking to open crypto currency business in Pakistan.
5. In essence, we had directed the committee to meet to decide whether it would be prudent to allow any kind of business in crypto currency in Pakistan keeping in view Article 18 of the Constitution which is a fundamental right which concerns the freedom of trade, business or profession. We had anticipated that the Committee might have made some kind of recommendation for the regulation of this business which if driven underground raises concerns in connection both with money laundering and terror financing.
6. The committee however have filed a detailed report which is taken on record which has made the following recommendations at Paragraph-8 of the report which are set out as under:-
8. Recommendations by the Committee Keeping in view the risks identified by the Committee, the following recommendations shall be forwarded to the Secretary Ministry of Finance, Government of Pakistan; i. A complete ban on all crypto currency and other related activities in the country After a careful risk benefit analysis, it emerged that the risks of cryptocurrencies for outweigh its benefits for Pakistan. The only use of crypto currency in Pakistan seems to be speculative in nature where people are being enticed to invest in such coins for the purpose of short-term capital gains.
7. This may result in the flight of precious foreign exchange as well as transfer of illicit funds from the country. In view of this, the Committee would like to make the above recommendation to the Secretary Ministry of Finance. ii. Unauthorized operations of exchanges to be banned As proposed time and again by the petitioner and assessment by the regulators on risk posed by crypto exchanges especially the scams reported locally and being investigated by FM, exchanges like finance, OctaFX etc. should be banned for their unauthorized operations in the country and proportionate and dissuasive penalties be imposed on them by the Federal Government as some other countries have done. In essence, the recommendations suggest a complete ban on crypto currency and other related activities in Pakistan.
8. We hereby direct the Committee to send a copy of the report to the Ministry of Finance and the Ministry of Law, who shall consider the same at joint meetings and reach a final decision whether or not crypto currency in any form is to be allowed in Pakistan and if so, what the regulatory framework would be of such business.
9. The Ministry of Finance and the Ministry of Law shall place before this court their Ant recommendation on the next date of hearing whether business of. crypto currency in any form can legally be carried out in Pakistan as this is also causing difficulty at this point in tithe for those persons who are engaged in such business keeping in view constant raids and freezing of bank accounts which are allegedly being made by the users/dealers of this type of currency by the FIA.
10. A copy of this order along with the Committees Report shall be sent to Secretary, Ministry of Finance and Secretary, Ministry of Law for compliance. On the next date of hearing, Secretary, Ministry of Finance or Additional Secretary, Ministry of Finance and Secretary, Ministry of Law or any other senior officer well conversant with crypto currency from the Law Ministry shall file their report in this regard and shall also appear in person. Notice also to D.A.G.
11. To come up on 11.04.2022 at 11:00 a.m.