Why is it “illegal” in Pakistan to use Bitcoin or the other 4000 cryptocurrencies as a medium for exchange of value? The answer is hidden in the law, that created the State Bank of Pakistan.
By Anthony Williams
Law is the language of “Power”, just as accounting is the language of “Business”. And when (N)ever the Twain shall meet, they give birth to new types of finances (that power new businesses). The purpose of this article is to share a few facts, which may motivate, you the reader to answer this simple question, “Will the present union of law and business, enabled by the fourth industrial revolution (Artificial Intelligence) be an empowering or enslaving experience for the millennial generation (people born between 1982 & 2004) of Pakistan”. The past millennium (1000 years) has been an enslaving experience for the people of South Asia, which can easily be proved by asking any layperson this question, “What is the main purpose of the constitution of your country?” and the answer will be “to constrain our freedom”; whereas, the correct answer is “to constrain the government and The State of the country, so as to allow the people to enjoy their freedoms”.
The Securities and Exchange Commission of Pakistan (SECP) on September 19th, 2018 issued a notification for the formation of a working group, whose purpose is to propose regulatory framework for the development of Fintech ecosystem in Pakistan and recommend public policy for its growth/progress. Financial technology (FinTech or fintech) is the new technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. FinTech is a new industry that uses technology to improve activities in finance. The use of smartphones for mobile banking, investing services and cryptocurrency are examples of technologies aiming to make financial services more accessible to the general public. (Banking & investing, we understand but what is cryptocurrency?). A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.
Cryptocurrencies are a kind of alternative currency and digital currency (of which virtual currency is a subset). Cryptocurrencies use decentralized control as opposed to centralised digital currency and central banking systems. The decentralised control of each cryptocurrency works through distributed ledger technology, typically a blockchain (see previous article “Blockchain and the sovereign individual), that serves as a public financial transaction database. Bitcoin, first released as open-source software in 2009, is generally considered the first decentralised cryptocurrency. Since the release of Bitcoin, over 4,000 altcoins (alternative variants of Bitcoin, or other cryptocurrencies) have been created. So, then why is it “illegal” in Pakistan to use Bitcoin or the other 4000 cryptocurrencies as a medium for exchange of value (meaning, to use for making payments in exchange for goods or services consumed)? After all the sure-way to exponentially improve the standard of living of all Pakistanis, is to help everyone have a medium of exchange for the “value they create”. The answer is hidden in the law, that created the State Bank of Pakistan.
The day was April 18th, 1956 that the law cited as State Bank of Pakistan Act, 1956 was promulgated; which according to its Article 24 gave the exclusive right to the State Bank to print and issue bank notes (rupee notes) including coins and sets out penalties (made it illegal) for the rest of us in Pakistan to do so. This problem (opportunity) is symbolic of the digital divide that separates the present-day Government & the State of Pakistan, from the millennial generation of Pakistan; who, unlike Superman love their krypto(nite). Who will give them their crypto and unleash their powers?
Anthony Williams is CEO of Tax Dosti and founding member of GBC Guild – Pakistan’s first cryptocurrency company.