Pakistan Introduces Crypto Licensing Scheme

Pakistan Cryptocurrency licensing Financial Action Task Force

Pakistan has introduced a raft of new regulations as part of its new cryptocurrency licensing scheme, becoming the latest jurisdiction to firm up its approach to regulating businesses in the crypto sector.

According to reports emerging in local media today, the federal government has settled on the new Electronic Money Institutions regulations on the recommendation of the Financial Action Task Force, in a bid to legitimize the previously unregulated sector.

Firms registering as EMIs are subject to a range of compliance measures, answerable to the government for failures to adhere to the standards set out in the regulations. Regulators retain the power to suspend and cancel operating licenses for those in breach of the rules.

As well as ensuring minimum capital requirements, the regulations also mean greater scrutiny of company executives, as well as a review of key business processes including data handling and customer due diligence.

In a statement, the State Bank of Pakistan said the regulations were designed to encourage payment services companies to innovate, in a bid to promote wider financial inclusion across Pakistan.

The Financial Action Task Force is a global body set up to monitor and prevent money laundering. The group has previously warned about risks around cryptocurrency, and especially in how it can be used in money laundering and terrorism financing.

The measures introduced by the government in Pakistan are designed to limit these risks, while creating a certain legal framework in which cryptocurrency businesses can operate within the country.

Specific regulation for the cryptocurrency and blockchain sectors has been to the benefit of those jurisdictions who have introduced measures so far, appealing to startups and blockchain innovators reliant on commercial and legal certainty.

While reducing the risks from money laundering and terrorism financing were at the top of the agenda, the measures are also expected to make Pakistan a more attractive jurisdiction for blockchain and crypto firms.

The move comes after the Financial Action Task Force said back in October that more global jurisdictions need to consider their own regulation for the crypto sector.

“There is an urgent need for all countries to take coordinated action to prevent the use of virtual assets for crime and terrorism.”