On Wednesday, the State Bank of Pakistan told the Sindh High Court (SHC) that it had decided to ban all cryptocurrencies.
As per the SBP, the federal government was entirely on board with the decision.
Deputy Governor SBP Seema Kamil submitted the report recommending that digital currencies be declared illegal.
On October 20, the SHC told the federal government to form a mechanism to regulate cryptocurrencies within three months. The court has since been hearing a case on digital currencies.
A two-member bench led by Justice Karim Khan Agha heard the case.
A panel constituted under deputy governor SBP and other officials pondered the functioning of all forms of cryptocurrencies in Pakistan. The committee recommended a ban on cryptocurrencies and other related activities in Pakistan.
A report was submitted on Wednesday to the Sindh High Court.
The report referred to the recent FIA investigation against crypto exchanges like OctaFX and Binance and the threats these exchanges posed to the investors.
The SHC ordered the report to be sent to the ministries of law and finance to decide the legality of the cryptocurrencies.
The court asked the government to form a committee composed of the federal secretary of finance and other important officials to determine the status of cryptocurrencies.
It is pertinent to state that the report ascertained that cryptocurrency was illegal and could not be used for trade. The report named countries, including Saudi Arabia and China, that have banned cryptocurrencies.
The report said cryptocurrencies were a virtual business that could be used to launder money and finance acts of terrorism.
Now, the law and finance ministries will formulate a mechanism to use or ban cryptocurrencies within the ambit of the Constitution.
The SBP urged the court to ban the use of “unauthorised operations” of cryptocurrency exchanges and penalise their use “as some other countries have done.”