SHC forms commission to examine legality of cryptocurrency

Maqbool Ahmed

20th Oct, 2021. 03:20 pm
UAE-based business advisers now accepting crypto payments---Photo: File

UAE-based business advisers now accepting crypto payments—Photo: File

KARACHI: The Sindh High Court on Wednesday formed a high-powered commission to look into the legality of the cryptocurrency business in the country and give its recommendations regarding making some law regulating or banning it.

A two-judge bench, headed by Justice Muhammad Karim Khan Agha, hearing the petition of social media activist Waqar Zaka issued the orders.

During the hearing, it transpired that currently, no legal framework exists to either allow or ban cryptocurrency business in the country.

A deputy governor of the State Bank of Pakistan (SBP) apprised the bench that a 2018 circular of the central bank only prohibits banking companies falling within its regulatory ambit from dealing in cryptocurrencies.

The deputy governor submitted that crypto had not been given a single status all over the world, adding that some countries recognise it as an asset and some as a commodity and yet some others as software.

However, the deputy governor explained that the SBP had neither banned cryptocurrency nor had it allowed the digital currency’s use.

A Security and Exchange Commission of Pakistan (SECP) director told the court that even though there is no law related to cryptocurrencies it does not consider it a ‘legal tender’ in the light of the SBP circular.

The SECP director submitted that the commission might take legal action against the international exchanges which were facilitating the mining of cryptocurrency in the country.

A joint secretary of the finance ministry tried to wash his hand on the matter by claiming that since the petitioner himself had declared the crypto a software, therefore the matter did not pertain to the ministry.

Justice Agha taking serious exception to the line of arguments taken by the joint secretary reminded the official that the ministry had the responsibility and the administrative control of the financial institution and policy decision regarding law-making about all and any financial matter must come from it.

Petitioner Waqar Zaka, who was himself pleading his case, apprised the bench that the FIA in almost all the FIRs that it had registered against the miners or holders of cryptocurrency had referred to the ban imposed by the SBP under the Pakistan Electronic Crime Prevention Act.

Interestingly, the director of FIA’s cybercrime wing who was directed to be present before the court did not show up.

The petitioner time and again pleaded with the court to decide about the legality of the cryptocurrency business in Pakistan and the action taken by the FIA against crypto miners and holders. However, Justice Agha observed that matter pertained to a policy decision that must be taken by the federal government.

He observed that what the court could do was to form a commission comprising of stakeholders which could hold discussions, deliberations and recommend to the government what should be done in this regard.

With the consent of the petitioner as well as representatives of the SBP, SECP and the finance ministry the bench formed the commission. It would be headed by either the governor or a deputy governor of the SBP and include senior officers from ministries of finance and information technology, SECP, Pakistan Telecommunication Authority and the petitioner as members.

With the consent of the petitioner and representatives of concerned government institutions, the bench directed the commission to hold its first meeting on October 25 and then have a meeting fortnightly and prepare and submit its report within three months.

The bench directed that the commission’s meeting should not be postponed because of the absence of any of its members and suitable replacement would be made.

The bench also directed the director FIA cybercrime wing not to cause undue harassment to cryptocurrency holders till the commission submit its report.