Islamabad: In a bold policy shift, Pakistan’s federal government has proposed amendments to the State Bank of Pakistan (SBP) Act, aiming to legalize digital currencies, including cryptocurrencies. These proposed changes could soon grant digital currencies, such as Bitcoin, official recognition and legal tender status in Pakistan, reshaping the country’s financial landscape.
Empowering SBP to Regulate Digital Currencies
If approved, the amendments would authorize the SBP to directly issue and oversee digital currency, allowing it to manage currency circulation in both physical and digital forms. This shift would place digital currencies under the SBP’s regulatory umbrella, seamlessly integrating them into Pakistan’s financial system. The amended SBP Act would introduce new clauses to formally classify digital currencies as legal tender, expanding the central bank’s role in managing digital payment frameworks.
Additionally, these changes would broaden Section 24 of the Act, which currently addresses physical currency issuance, to encompass digital currency. This would enable the SBP to supervise digital payment systems with authority to establish a subsidiary dedicated to regulating, securing, and enhancing transparency in digital transactions.
Strengthening Oversight and Expanding Governance
To prevent unauthorized issuance, the proposal includes a penalty clause, imposing fines up to twice the value of illegally issued digital currency. Alongside digital currency regulations, the government suggests lifting the ban on dual nationals serving as SBP Governor, deputy governors, or non-executive directors—a restriction initially put in place in January 2022 as part of IMF-led reforms.
Further amendments target governance improvements within the SBP. Revisions to Section 9A propose granting the SBP board greater authority over critical financial reporting, including approving annual and half-yearly reports, economic stability assessments, and financial statements. Adjustments to Section 9B aim to streamline board procedures, allowing the chairperson or any three non-executive directors to call board meetings as needed, further clarifying governance protocols.
If these amendments pass, Pakistan would join a select group of nations with a formal digital currency framework, taking a substantial leap toward financial modernization and inclusivity across the region.
