Karachi: Pakistan's central bank has recommended a ban on cryptocurrencies, arguing in documents filed in an ongoing court case that allowing them would lead to capital flight.
The Sindh High Court has been hearing a constitutional petition filed in 2019, seeking to overturn 2018 central bank guidance advising banks and payment system operators not to process and invest in virtual currencies.
The court sought the advice of a committee headed by a deputy governor of the central bank, which presented its report on Wednesday.
"The State Bank of Pakistan is concerned about cryptocurrency trading by individuals and entities as it results in outflow of foreign exchange from the country," the committee wrote in the report, reviewed by Reuters.
He noted that all cryptocurrencies were issued outside of Pakistan and said that Pakistani residents who purchased such tokens would send capital abroad.
"After careful risk-benefit analysis, it emerged that the risks of cryptocurrencies far outweigh their benefits for Pakistan," the report says.
Pakistan has been dealing with currency devaluation, high inflation, a current account deficit, and declining foreign exchange reserves.
