Pakistan is one of the countries that has not been quite “pro-crypto”. Just on the contrary, the country has been quite strict when it comes to the use of cryptocurrencies. For example, some time ago, the central bank of the country warned all financial institutions and banks that the use of virtual currencies is highly discouraged.
Pakistan’s major concern is the illegal use of digital coins, and regulation of the entire sector seems inevitable. Now, the recommendation for such new regulations comes from Financial Action Task Force (FATF), which has advised the government to introduce the Electronic Money Institutions (EMIs).
The regulations will come into effect immediately. According to the website of FATF, these are the major concerns of why such regulation was needed:
However, other characteristics of virtual currencies, coupled with their global reach, present potential AML/CFT risks, such as: the anonymity provided by the trade in virtual currencies on the internet, the limited identification and verification of participants, the lack of clarity regarding the responsibility for AML/CFT compliance, supervision and enforcement for these transactions that are segmented across several countries and the lack of a central oversight body
All EMIs will be required to meet certain special requirements, such as capital requirements, the background and biographies of CEOs and managing directors, and any other relevant data that might be helpful in determining what stands behind the company that wants to use/transact with crypto.
The goal is for companies to obtain a special government license that will allow them to actually be compliant with the new regulation. Any other participants that want to transact/trade with cryptos will not be allowed, and some serious legal measures may be taken.
According to press, the new regulations will be “celebrated” at the Islamabad office of the State Bank of Pakistan. While there were some draft documents regarding such actions in late fall of 2018, the rules were not officially implemented until now.