Financial regulator Securities and Exchange Commission of Pakistan (SECP) is seemingly leaning toward a more liberal stance on crypto regulation in the country with over 212m people, which is already one of the top emerging crypto markets, a recent position paper indicated.
The SECP admitted that its position is based on the ‘do-not-harm’ approach.
This approach “is based on the conjecture of ‘let-things-happen’ approach, described by the [US] Commodity Futures Trading Commission (CFTC) as the ‘do-not-harm’ approach …, where the financial sector is considered as dynamic and the associated need to innovate is strongly emphasized,” the SECP said. “The ‘do-not-harm’ approach is highly cognizant of not letting overregulation stifle innovation, and supports finding the optimal balance between innovation, the concomitant risks and the wider safety of the financial system”.
Based on this approach, the agency said primary token offerings in Pakistan could be carried out once initial exchange operators (IEOs) are registered.
Meanwhile, secondary trading would be enabled by allowing IEOs to register as decentralized exchange platforms, but also by separately registering digital asset trading operators, allowing them to provide trading settlement and custodian services. Also, the regulator indicated that secondary trading could be allowed on the Pakistan Stock Exchange too.
The regulator said it is awaiting industry feedback on its proposals, and that future discussions related to the crypto regulatory framework will be published on its website and social media accounts.
“SECP intends to study and evaluate the effects of the distributed ledger, digital assets and other innovative technologies and encourages market participants to get engaged with the regulator,” the paper said. “While ensuring that investors and markets are protected, SECP aims to encourage innovative and beneficial ways to raise capital.”
In another sign of an increasingly lenient approach toward crypto, a lawyer for the central State Bank of Pakistan (SBP), recently told the High Court of Sindh, the highest judicial institution of the Pakistani province of Sindh, that the central bank has issued a warning on using crypto, but did not ban it, as reported by local TV channel Samaa.
Meanwhile, Pakistan has experienced a steady growth of bitcoin (BTC) transactions, as data from major wallet and exchange platform Blockchain.com showed earlier this year. Last July, the platform said that Pakistan was one of the top 10 countries showing increasing use of its products, alongside Vietnam, Bangladesh, South Africa, Argentina, Bulgaria, Nigeria, Japan, the Dominican Republic, and Switzerland.