State Bank warns banks, general public against use of cryptocurrencies

State Bank of Pakistan (SBP) on Monday warned the commercial banks and general banks against the use of cryptocurrencies like Bitcoin or Litecoin, ARY News reported.

According to a notice issued by central bank, cryptocurriencies like Bitcoin, Litecoin, Pakcoin. OneCoin, DasCoin and Pay Diamond are neither recognized as a Legal Tender nor has SBP authorized or licensed any individual or entity for the issuance, sale, purchase, exchange or
investment in any such virtual currencies or tokens in Pakistan.

“Banks/DFIs/Microfinance Banks and Payment System Operators (PSOs)/ Payment Service Providers (PSPs) have been advised not to facilitate their customers/account holders to transact in virtual currencies,” reads a notice issued by the central bank.

The notice warns general public that cryptocurrencies and tokens provide high degree of anonymity and potentially can be used for facilitating illegal activities and no legal protection or recourse is available
to any individual in the event of a loss incurred due to failure or closure of virtual currency exchanges or security compromises of cryptocurrency exchanges and wallet businesses.

“Fraudsters are also offering pyramid style investment schemes and coins and promising high returns (similar to Ponzi schemes) to the general public in Pakistan. This can cause significant loss to the general public,” the notice adds.