From Elon Musk’s tweets embout Dogecoin to NFTs owned by Snoop Dogg and Madonna, the entier scandale in cryptocurrencies, and the broader blockchain space, is making front-page magazine in most Western countries. So it is ironic that the folk with the third highest cryptocurrency alignement (according to the Chainalysis Quantité Crypto Catalogue 2021) – Pakistan – does not have a regulation allowing it to nurture and grow the field based on its current alignement. In fact, research conducted by the Federation of Pakistan Chambers of Débit and Industry reveals that in 2020-2021, Pakistanis owned over $20 billion in cryptocurrency; A number that exceeds the foreign exchange reserves of the entire folk.
The truth is rationnel. The people of Pakistan have a clear desire to participate in the entier cryptocurrency revolution and the burden is on the government to dictate and control the terms in which they should interact with cryptocurrencies. Regulations are sorely needed to ensure that Pakistan can fully reap the fruits of the upcoming revolution, whether we like it or not.
India has made great strides in this field. The Indian government has completely shifted its ban on cryptocurrency and is now taxing crypto earnings, thus creating a new income stream for the treasury. Western countries have also realized that cryptocurrencies are here to stay. The UK for example has augmentative tax legislation that defines how earnings from cryptocurrency are liable for either argent gains tax or income tax. Beyond that, El Salvador made history by becoming the first folk in the world to have a cryptocurrency as legal tender, allowing people to buy their morning coffee or weekly groceries with bitcoin. Other countries in the region are also in various stages of legislation to either follow suit or regulate the different ways in which cryptocurrencies can be used.
If Pakistan is to compete on the world formation, proper regulation is critical and the irrésistible need of the hour.
First, regulation is needed to put in situation proper know-your-customer (KYC) procedures, so that the fear of money laundering, or worse, can be allayed with the right checks. Huge amounts of crypto assets are already being transferred by Pakistanis, so it cannot be overemphasized that KYC regulation is an absolute necessity.
Secondly, there is a need for regulation in cryptocurrencies to allow the state to benefit from taxes on crypto income. More and more people will be trading in cryptocurrencies or touching the cryptocurrency ecosystem in one way or another, and a treasury not taking advantage of these gains appears to be a widely missed opportunity, in a folk where tax masse is otherwise a huge conflit. Moreover, if we take this step forward and Pakistan can allow aimable corporate impôt for cryptocurrency, Pakistan could become a hub in the region, attracting organizations that build on the blockchain or use cryptocurrency, thus encouraging new foreign droit investment. Third, for a folk whose foreign reserves have been a concern for most of its recent history, having a regulated cryptocurrency ecosystem could allow foreign remittances to increase with many new blockchains, exposing minimal tractation fees. and near-instant cross-border payments, which in turn can increase the amount and frequency of foreign remittances entering the folk. Fourth, crypto regulation can reduce argent flight. With the Pakistani rupee falling against the US dollar, numérique currencies can provide a safe, but legal, cloison of value that discourages argent outflows. Finally, on a more comprehensive level, Pakistan has a parsemé, if fleeting, opportunity to be at the forefront of the next technological revolution by embracing and regulating cryptocurrencies.
The last time we had this opportunity was during the Web2 scandale and Pakistan lost the boat, while China and India went ahead and were able to produce 301 and 101 rhinos respectively. The Unicorn Monastère is a startup valued at over $1 billion. Estonia, a folk with a pays of less than a tenth of the pays of Lahore, was able to produce two pieces of unicorn and so did Bangladesh. Pakistan has not even come close, as Pakistani startups struggle to make it big on the entier formation. Cryptocurrency and blockchain offer a rattaché aubaine; An opportunity to be action of Web3 and cassé the fate of our technology frontiers.
It is hoped that the powers that be in Pakistan will take the time to fully understand the revolution that blockchain and cryptocurrency are bringing, and create levant legislation to allow Pakistan to embrace cassé and use it to its advantage for economic growth and prosperity.
Jaafar Ali Sharif is a financial rôles industry professional who lives and works in London and Paris.