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Crypto Exchanges& Regulation in Pakistan

Top exchanges in Pakistan by Coincub criteria
Article review author
Jonathan Lea
Pakistan head image

Crypto Country Rating: 6.3/10

7/10
Institutional acceptance
Positive but waiting for government lead
8/10
Exchanges & Wallets availability
Leading exchanges available
6/10
Government regulation
Unheeded trading bans but new change of gov attitude and new legislation on the way
5/10
Defi acceptance
Assessment of blockchain well underway led by government
6/10
Financial services
Huge demand from population but services in need of government strategy
6/10
Transparency
Fundamental - many unregulated exchnages
6/10
Spending crypto
Booming cryptoeconomy but no direct spending opportunities
6/10
Banks activity in crypto
Conservative outlook - but CBDC being assessed

Bitcoin and crypto trading in Pakistan

Spend Bitcoin and cryptocurrency trading in Pakistan

The crypto economy in Pakistan has little or no regulation but an enthusiastic population for trading, transferring and mining cryptocurrency. The government has set up a committee to study cryptocurrency regulation, which includes observers and relevant bodies from the worlds of finance and security, committed to getting to grips with regulation.

Law and crypto trading in Pakistan

While regulation is light and despite a largely unheeded ban on trading cryptocurrency by the State Bank of Pakistan, the cryptoeconomy is booming in Pakistan. Trading has recently been more openly advocated by the authorities, with new regulatory moves being discussed and said to be imminent. Pakistan is served by many overseas exchanges and has a population with high volumes of trading and holding crypto: mostly by using offshore wallets such as Neteller, Skrill and Payoneer. Further, operators facilitate the transfer of funds in offshore crypto exchanges in return for payment made domestically. The mix of population eager to join the crypto rush ranges from the man and woman in the street to professional investors, resulting in an explosion of trading and mining activity. Generally interest is high too, with online information gathering around trading, exchanges and mining. Only recently have moves been made to better regulate and control this burgeoning interest, primarily to get to grips with the obvious threats of money laundering and terrorist financing.

Paying tax on my crypto trading in the Pakistan

The ban on crypto trading in Pakistan only served to make it more popular and drive much of the industry into the hands of less secure and unreliable exchanges and wallets. In a country where regulation was non-existent, the issue of tax on gains is a very grey area. For people who don’t have their bank accounts, estimated to be around 2 million, cryptocurrency provides low cost transacting. For the most part, efforts by the authorities have been centred upon money laundering rather than taxation.

Tax relief, changing residency and gifting crypto coins Pakistan

The unregulated and haphazard growth of the cryptoeconomy in Pakistan offers no clear direction on the taxation of cryptocurrency gains. Many exchanges and wallets are offshore and unregulated. Watch this space.

Crypto mining regulations in Pakistan

Thinking of mining crypto? It’s a highly technical and expensive activity at the best of times, involving powerful computers – and lots of energy – but it’s been taken up avidly by many Pakistanis who see a ‘rags to riches’ story for themselves. Provincial government in Pakistan has also been interested in the development of officially backed mining (using hydro-electric energy of which Pakistan has a surplus of and would only be wasted anyway) as a means to generate funds and provide employment. Online mining courses and the sellers of mining technology proliferate, but paying tax on gains isn’t very clear at present.

Planning your retirement and investing in cryptocurrency in Pakistan

Crypto is a big investment play among an increasing amount of the population. All leading investment banks are facilitating investments in crypto services to their clients and one of the largest fund managers has begun investing in it. That said, cryptocurrencies are still viewed as volatile and unpredictable for many organizations offering long term financial planning so it is likely that any investment plan would carry higher fees due to the higher risks involved.

Pakistan’s Financial services’ outlook on Bitcoin and crypto economy

Pakistan joins the long list of countries whose central bank has been investigating the possibilities and potential applications of a central bank digital currency (CBDC) within a regulatory framework. Institutions have traditionally held a conservative view of the cryptoeconomy, especially in view of the unregulated growth of money laundering and electronic fraud. Despite concerns, the cryptoeconomy continues to grow fuelled by positive public opinion and most overseas exchanges operate there with crypto apps that track and trade crypto gaining more downloads than most leading banks.

Pakistan and DeFi: the latest developments

Blockchain is the technology that many governments are keen to promote, for fear of missing out on the advances being made. To this end, Pakistan is keen to review the new technology with a leading university, Lahore, being given a significant grant to study blockchain networks, Bitcoin apps and smart contracts. In a country only just getting to grips with regulating cryptocurrency, and investigating a central bank digital currency, it is not surprising that any development of the possibilities of decentralized finance (DeFi) is a long, long way off.

Crypto security, transparency and compliance in Pakistan

Having a ban on something is the surest way to make it successful – a bit like the prohibition in America – and so it is with crypto in Pakistan. The so-called ban on crypto trading, along with failing to regulate the cryptoeconomy has led to the growth of interest, but also the cases of fraud, and a corresponding lack of clarity over transparency and security. The Know Your Customer and Anti Money laundering requirements that many countries now employ have yet to come about in Pakistan. By setting up a regulatory framework, Pakistan could attract more reliable blockchain companies and exchanges. There may be some significant movement on regulation to ensure a stable and supportive regulatory framework, but it has not happened as yet.

Helpful?
FAQ

New to crypto? Here’s our guide!

FAQ Image #1 01 Why Bitcoin? It seems like the buzz around Bitcoin just keeps growing. Bitcoin is a constantly evolving technology with a passionate community. What is it about the digital asset that makes it such a controversial topic and attractive investment?
FAQ Image #2 02 How to Get Started with Bitcoin It can be difficult to get past the technical jargon surrounding bitcoin (BTC) and other cryptocurrencies in order to figure out how you can buy and store them. Beginners can purchase Bitcoin, for example, on many exchanges using fiat currency like U.S. Dollar, Euro or British Pound.
FAQ Image #3 03 Blockchains 101 Blockchains are a type of database where data is stored in blocks that are chained together. As new data comes in, it is entered into a block, which is then chained to the previous block. The Bitcoin blockchain serves as a ledger that records every Bitcoin transaction in history.
FAQ Image #4 04 Bitcoin in the Real World Ok - you’ve found an exchange, bought your Bitcoin, and stored it safely. What’s next? By now you can buy just about anything with Bitcoin if you try hard enough, from Amazon gift cards to an old master painting. You can also convert your BTC to fiat with ATMs, an exchange, and more.

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