The crypto community in Pakistan is about to start living a new age but it looks like there are still some issues in the way of the country’s people finally seeing the crypto revolution.
About a year ago, Pakistan made a blanket ban on cryptos, which made things harder for the investors. However, a year is a long time and now the government is finally able to draft a new regulation that will not be so harsh with the crypto investors.
Even with these incentives, though, it seems that the country still lacks a strong demand for cryptos.
New Regulation Will Be Good For Cryptocurrencies
The State Bank of Pakistan has recently declared that any bank that was willing to work together with companies that offered services related to “electronic money” could start looking for licenses. This was a great move forward, as now the companies in the country will finally be able to step away from the unregulated market and become more legitimate.
Now, it was reported by local media outlets that the government and representants from the bank have reunited in order to discuss the creation of crypto regulation in the country and the creation of the so-called Electronic Money Institutions (EMI).
Compliance is important for Pakistan because, more than once, the country has been accused of being too relaxed on its anti-money laundering laws, which are deemed to be weak by the Financial Actions Task Force, an international financial regulator that curbs money laundering and terrorism financing.
Muhammad Ahsan, the founder of a local consulting company, Go4 Blockchain, applauded the change of heart from the government. However, he knows that it is still a long way before the country can finally have all that is required for a healthy market.
Last year, the central bank emitted a report in which it affirmed that no person or company could trade, exchange or invest cryptos in Pakistan. At the time, it was said that this was due to security-related reasons and that cryptos were too unstable. Now, the government is more friendly to cryptocurrencies, which can be clearly seen by the new laws.
This is a great start that will finally jumpstart the market in the region, but there is one aspect that still has to be taken into account in order for the cryptos to have success in the country: demand.
Pakistan Still Needs More Crypto Demand
The crypto ban in the country had a devastating effect on the demand for crypto assets. This is part of the reason why most people simply choose not to use cryptos in their daily lives there.
Ahsan suggested that there is the need for a strong demand before a new market can emerge and this is precisely the main problem here.
Until now, the traditional banking system of the country has been somewhat effective and the ban made it much more efficient than using illegal cryptos, so people in the region are still lacking relevant use cases right now, which can be a major problem for adoption. In fact, Pakistan is a fairly well-banked country, too, which diminished some of the need for the product there.
According to Ahsan, the only way to actually make cryptos become successful in the country is to educate people about all the advantages that they can have by using it. This will still take a few years, he believes, but it can be done in time and will help to reach mass adoption eventually.
Another person of the industry, Muhammad Usman Khan, the COO of Crypto Council, a blockchain hub based in the United Arab Emirates, has also spoken on the subject. He said that most retail and commerce communities are still using traditional payments in the country and that this can be a big barrier at the moment.
He sees the country as lagging behind in digital payments, since most people still fiat and there is even a majority of the people who use paper money, too. Digital payment solutions have to be created and marketed before they can finally be more well-known in the country.
Luckily, the new legislation will help a lot. Pakistan may be lagging behind right now, but this does not mean that it has to continue this way. With the help of formal legislation, many new companies can open up the way for the future in the country.
Usman believes that the interest in the blockchain will grow with time and entrepreneurs, tech and educational institutions will be important in this development.