Wednesday, December 2, 2020

Pakistan’s securities regulator mulls new legal framework for crypto

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Pakistan’s government is working on a framework for regulating cryptocurrencies like Bitcoin (BTC).

The Securities and Exchange Commission of Pakistan, or SECP, has published a consultation paper on regulating digital assets. Issued on Nov. 6, the paper outlines major concepts for the growing digital finance market in Pakistan and examines the existing regulatory frameworks developed by other global jurisdictions.

In the document, the SECP emphasizes that digital assets — also known as virtual assets, or crypto assets — are the “start of a new era of digital finance.” According to the regulator, the new era of digital finance “could only be possible by initiation of a new era that re-invents regulatory regime [or] measures as they are known to the regulators globally today.”

The SECP noted that the consultation paper focuses exclusively on private crypto assets and does not include remarks on a central bank digital currency, or CBDC.

Distinguishing several types of digital assets, the SECP pays particular attention to security tokens and utility tokens. According to the regulator, one of the key advantages of security tokens is the ability to fractionalize each asset, which enables benefits like lowering barriers for investment by retail investors. Other advantages include transparency, improved liquidity, improved clearing and settlement mechanisms and more automation tools, the paper reads.

The SECP will continue to engage with market players and welcome industry feedback in developing a regulatory framework for crypto.

Pakistan has been slow to adopt new frameworks for digital money and cryptocurrencies. Last year, the country was planning to introduce new digital currency regulations for electronic money institutions. In April 2019, Pakistan’s central bank announced plans to issue a CBDC by 2025.