The Pakistani federal government will be putting out a new regulatory framework that will affect cryptocurrencies. The Electronic Money Institutions framework will start today. The framework was based on input from the Financial Action Task Force.
Industry insiders believe that the Pakistani government is more serious than ever before to regulate and monitor digital currencies. There will be a formal ceremony to inaugurate the framework in Islamabad. It will take place in the offices of the State Bank of Pakistan and will include multiple financial luminaries of the state.
The people attending include the Minister for Finance, SBP Governor, and the Finance Secretary among other important officials.
Sources within the FATF have told key industry players the reasons behind the quick implementation of these new regulations. While the regulation of digital currency is an important step in and of itself, it was other factors that weighed more heavily. Cryptocurrency has long been used to fund terrorism. It has also been a haven for money laundering. These regulations will enforce strict policies that aim to root both problems out of the Pakistani economy.
The new framework will require companies that deal in cryptocurrency, such as exchanges, to meet new capital requirements. The executive of such companies will undergo scrutiny to make sure they have no criminal convictions. The rules also state that any company must keep a record of their clients' personal details. These include the name, ID number, and address. A phone number is also required. All these must be stored, securely, by the company itself.
There is one aspect of the regulations that end users of cryptocurrency are happy about. That is the defining characteristic which states that companies are responsible for the money of clients. That means that should any breach happen; the company could be liable and would answer to the full power of the authorities.
FATF, a financial watchdog that has a global presence, has repeatedly warned that cryptocurrency poses a great threat from crime. This new technology has made it supremely easy for criminals to transact worldwide. They also cite terrorism as a leading beneficiary of cryptocurrency to date.
The watch-dog is busy drawing up regulations for the international cryptocurrency. It is believed by many in the industry that the rules will be finished by June. Industry insiders are cautious over how much influence the FATF have and what these new global regulations could mean for the cryptocurrency industry as a whole.
The FATF plans to force the global financial regulatory community to draw up regulations forcing cryptocurrency companies to license themselves properly. This is mainly aimed at crypto exchanges, but they have said that digital wallet companies and ICO services will be included in this list as well.
“There is an urgent need for all countries to take coordinated action to prevent the use of virtual assets for crime and terrorism,” the organization said when it commented on regulatory matters in October.
The new regulations in Pakistan come from urging in February where the FATF stated that Pakistan was moving too slowly and wanted to see something done by May. It seems they were heard.
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