State Bank of Pakistan, the country’s central bank, has recently banned cryptocurrency trading and initial coin offerings (ICOs). The rash decision of the bank could become a major mistake for Pakistan’s economy moving forward.
Throughout 2018, many of the major economies internationally including South Korea, Japan, and the US have embraced the cryptocurrency market. The three countries have imposed practical regulations for cryptocurrency exchanges and investors, and Japan has already introduced its intention to legalize initial coin offerings (ICOs).
The South Korean government and the Financial Services Commission (FSC) released its plans to legalize domestic ICOs once again, as soon as taxation policies for token sales are drafted and passed by the government. While the US and the Securities and Exchange Commission (SEC) are cracking down on unregulated iCOs, the SEC clearly stated that it is open to regulating private iCOs if it goes through the agency. So far, the SEC has stated that not a single ICO has applied to the SEC.
Earlier this year, Kakao, South Korea’s largest internet conglomerate which manages KakaoTalk, KakaoPay, KakaoTaxi, KakaoStory, and other massively popular applications in the country, teased its plan to launch a blockchain venture and an ICO outside of the country, due to the strict policies of South Korea. Consequently, the South Korean government stated that it may allow domestic ICOs, if they are approved by local financial authorities.
While major economies are scrambling to regulate the cryptocurrency market, small economies like Pakistan and Vietnam have completely shut out the cryptocurrency market, rejecting users, investors, and businesses, and possibly billions of dollars.
On April 6, the State Bank of Pakistan announced that local financial institutions, banks, and credit card service providers are not allowed to be involved in the cryptocurrency market in any way, and are not allowed to process cryptocurrency transactions, promote, and invest in the cryptocurrency market. It completely dismissed its local cryptocurrency market.
In hindsight, Pakistan’s ban on cryptocurrencies has virtually no impact on the global cryptocurrency market, given that the Pakistan cryptocurrency market does not even account for 0.1 percent of the global cryptocurrency market. But, Pakistan has made an error in dismissing overseas blockchain companies that could potentially expand into or relocate to countries like Pakistan for cheaper resources.
Case of Malta
Malta has taken the opportunity to appeal to the blockchain sector and companies within it. This week, Changpeng Zhao, the CEO at the world’s largest cryptocurrency exchange Binance, stated that 20 large market cap companies, mostly billion-dollar companies, are planning to move to Malta, following the roadmap of Binance.
In its official statement, Binance also revealed that it will hire 200 full-time employees in Malta to oversee its cryptocurrency exchanges, which are expensive positions to fill given most of the openings are for full-time developers. Tron and other multi-billion dollar companies may do the same and move to Malta, while blockchain startups disregard countries with impractical regulations, such as India, Vietnam, Pakistan, and Thailand.
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