Islamabad:
Finance Minister Muhammad Aurangzeb warned on Saturday that Pakistan risks sliding back to the gray list of the financial action group due to unregulated digital transactions performed by approx. 15% of the population and attempts to establish a transparent regulatory regime.
“If a certain level of activity happens and happens in this scale, it’s only a matter of when, not if we want to get into trouble as a country, as a superb again,” said Senator Aurangzeb, talking at the workshop about the block chain and digital assets’ Technology and Innovation.
The Minister added that Pakistan, in terms of knowing your customer (KYC) and sanctions against money laundering, left Pakistan the gray list after six years of great difficulty, and this (digital transactions) cannot be a reason to go back there.
His statement came two days before the government called the girl meeting in Pakistan Virtual Assets Regulatory Authority (Pvara), which will be held on Monday. The session will review key policy items and discuss how to proceed with a regulatory framework, the minister declared.
Aurangzeb shared that over 25 million people or 10-15% of the country’s population, especially young people, are involved in digital businesses and this cannot be ignored. In this context, Aurangzeb said the increased activity should be regulated due to the danger of international sanctions.
The digital transactions are so far illegal in Pakistan, and the changes in connection with the statement of digital currencies are pending for the approval of the federal cabinet. Prime Minister Shehbaz Sharif has constituted a committee to further review these changes, especially the proposal to allow double citizens to become deputies in the central bank.
Aurangzeb emphasized the need for Pakistan to accelerate its adoption of blockchain, artificial intelligence (AI), cryptocurrency and web 3.0 technologies to strengthen the country’s digital economy.
The finance minister said the world has already made progress in this space and Pakistan must not hang behind. “We have been very blessed in getting some international collaborations and international success transfers. We do not have to start from Ground Zero and use these templates and see if it works for Pakistan or not.”
“We need to speed up our journey with regard to the new economy and the ministry is ready to help,” he added.
The Minister of Finance noted that the country’s economy is moving in the right direction and highlighting Pakistan’s successful exit from the FATF gray list, calling for greater transparency in digital transactions.
The minister said there is an offensive element, an economic element, and that there is a defensive element from a legislative point of view that the government would look at.
Aurangzeb said the parliamentary standing committees from next week would begin discussing the virtual assets regulation that the government had promised a few weeks ago to establish an independent regulator of virtual assets and cryptocurrencies.
Under the regulation, the government has established the “Pakistan Virtual Asset Regulatory Authority (Pvara), which is an autonomous federal body authorized to licenses, regulate and oversee units that trade with virtual assets”.
Para is based on ad-hoc law, which expires in four months and can be expanded by another four months. To give it duration, both parliamentary houses must pass the Pvara Act.
The authority has been given extensive powers to ensure transparency, compliance, financial integrity and prevention of illegal activities in accordance with international standards, including FATF.
Under the regulation, any person or business intended to offer virtual asset services in or from Pakistan have a license of Pvara. A structured license regime will be introduced with specific requirements for incorporation, operational capacity, compliance framework and reporting obligations, added the statement.
The regulation also incorporated a framework for responsible innovation by establishing a regulatory sandbox, allowing new technologies and business models to be tested during supervision monitoring. “Technology is about being faster, cheaper and better. If blockchain, AI, Crypto and Web 3.0 can, in the context of the economy, deliver it to Pakistan, that’s what we collectively shoot for,” he said.
