Legalising digital currency
The proposed amendments introduce, for the first time, the concept of digital currency in the SBP Act. Sources said that until now, the SBP had consistently rejected digital currency proposals and even issued public advisories warning against their use.
The proposed amendments define digital currency as “a digital form of currency issued by the bank under section 24 as legal tender under section 25.” Section 24 authorises the SBP to issue banknotes, which are recognised as legal tender under section 25.
Additionally, an amendment to section 4C, which defines the SBP’s functions, proposes granting the central bank the authority to issue digital currency. This change would allow the SBP to manage Pakistan’s currency “in physical or digital or both forms.” The SBP also intends to establish a subsidiary to develop and operate digital payment systems.
The amendments to section 17 authorise the SBP to conduct “central bank digital currency” business, and similar changes are suggested for section 24.
Previously, the SBP had issued public advisories warning the public about virtual currencies like Bitcoin, Litecoin, Pakcoin, One Coin, Das Coin, Pay Diamond and others, clarifying that these tokens were not recognised as legal tender in Pakistan. The central bank highlighted concerns about the anonymity associated with virtual currencies, which it warned could facilitate illegal activities, and noted the lack of legal protection in cases of loss.
The new amendments also propose a penalty for unauthorised digital currency issuance. Anyone found issuing digital currency illegally would be fined an amount equal to twice the value of the illegal issuance.
