FIA asks PTA to prohibit all cryptocurrency sites

The Federal Investigation Agency (FIA) has decided to approach the Pakistan Telecommunication Authority (PTA) to expressly prohibit cryptocurrency-related websites and blacklist them in Pakistan.

According to local news and sources, the federal watchdog is looking into a variety of regulation options to tighten its grip on the local crypto space, with the goal of preventing online fraud and money laundering using the instrument’s ‘untraceable’ network.

Sanaullah Abbasi, the Director-General of FIA, recently spoke at a press conference after meeting with a delegation of senior officials from the State Bank of Pakistan (SBP) at the Cyber Crime Circle Office and informed reporters about the agency’s ongoing efforts to combat digital/virtual assets.

“Cryptocurrencies have given fraud a new dimension,” he said, and added that the regulator “will approach the Pakistan Telecommunication Authority for blocking websites dealing in cryptocurrencies to prevent fraud and possible money laundering”.

The illegal use or misuse of cryptocurrencies is not addressed in any section of the Prevention of Electronic Crimes Act, 2016, the Foreign Exchange Remittance Act, 1947 (FERA), or the Anti-Money Laundering Act, 2010 (AMLA), according to the meeting. There is also no regulatory framework in place to ensure that virtual asset service providers (VASPs) follow FATF guidelines.

It was also revealed that SBP and the Securities and Exchange Commission of Pakistan (SECP) had taken a ‘prohibited approach’ to deal with digital/virtual currencies, issuing warnings to citizens.

In the last few weeks, the world of cryptocurrencies has been shaken by a series of regulatory quakes in Pakistan, as local officials appear to be stepping up their crackdown on illegitimate sources of funding.

FIA has launched an investigation into a multibillion-dollar scam involving 11 Binance-linked applications that defrauded Pakistani investors out of over $100 million (Rs. 17.68 billion). While the precise number is unknown, unofficial data suggests that over 37,000 people in Faisalabad alone have been misled after investing in phoney cryptocurrency scams that promised big profits.

Officials with knowledge of the situation feel that the legal ambiguity surrounding digital currency trade has made it easier for Pakistanis to fall prey to financial scams.