On November 4, the State Bank of Pakistan (SBP) unveiled policy proposals that would legally recognize digital assets, including cryptocurrencies, as legal tender.
The proposals, outlined by the Monetary Policy Committee under SBP Governor Jameel Ahmad, include amendments allowing SBP to issue digital currency and penalizing unauthorized issuances.
The proposal defines digital currency as “a digital form of currency issued by the bank under section 24 as legal tender under section 25,” aligning digital currency with the bank’s authority over banknotes.
The amendments further update section 4C to formally allow SBP to manage currency in both physical and digital forms. Additionally, a new subsidiary focusing on digital payment systems is planned, supporting potential central bank digital currency (CBDC) operations.
Shift in SBP’s cryptocurrency stance
Previously, the SBP had cautioned the public against virtual currencies like Bitcoin, Litecoin, and Pakcoin, citing concerns over their anonymous nature, which could facilitate illegal activities. The SBP had clarified that these tokens lacked legal standing in Pakistan and warned of limited recourse in cases of financial loss.
Should the proposed amendments pass through the next stage of government approval, they would not only allow the SBP to issue a government-backed digital rupee but also facilitate blockchain-based transactions, potentially opening avenues for cryptocurrency trading.
Amendments to SBP act and dual nationality rules
Government sources further revealed that the finance ministry drafted nearly a dozen amendments to the SBP Act, which have been reviewed by the Ministry of Law. A summary has been sent to the federal cabinet, signifying a broader shift in financial policy.
Notably, the proposed amendments would also relax restrictions on dual nationals serving in high-level SBP roles, including the positions of governor, deputy governors, and non-executive directors.
This rule, established in January 2022 under the influence of the International Monetary Fund (IMF) and the prior SBP administration, disqualified dual nationals from these roles. The new amendments propose to remove this restriction, potentially paving the way for candidates like Dr. Inayat Husain and Dr. Saeed Ahmad—both holding dual nationality or foreign-origin cards—to fill two soon-to-be-vacant deputy governor positions.