The Securities and Exchange Commission of Pakistan (SECP) has directed all companies and Limited Liability Partnerships (LLPs) to refrain from processing, using, trading, holding, transferring value, promoting, and investing in virtual currencies/tokens.
In this regard, the SECP has issued SRO 795 (I)/2020.
Within the context of Virtual Currencies/Tokens, the SECP has also directed the securities brokers, commodities brokers, insurance companies, Takaful Operators, non-banking finance companies (NBFCs), and Modarabas to report any transaction in this regard to the Financial Monitoring Unit (FMU) as a suspicious transaction in compliance with Anti Money Laundering and Countering Financing of Terrorism) Regulations 2018.
According to the SECP’s notification, the State Bank of Pakistan through its Circular No. 03 of 2018 dated April 6, 2018, has prohibited dealing in Virtual Currencies/Tokens. It reads:
Virtual Currencies (VCs) like Bitcoin, Litecoin, Pakcoin, OneCoin, DasCoin, Pay Diamond etc. or Initial Coin Offerings (ICO) tokens are not legal tender, issued or guaranteed by the Government of Pakistan. SBP has not authorized or licensed any individual or entity for the issuance, sale, purchase, exchange or investment in any such Virtual Currencies/Coins/Tokens in Pakistan. In view of the foregoing, all Banks/ DFIs/ Microfinance Banks and Payment System Operators (PSOs)/Payment Service Providers (PSPs) are advised to refrain from processing, using, trading, holding, transferring value, promoting, and investing in Virtual Currencies/Tokens. Further, banks/DFIs/Microfinance Banks and PSOs/PSPs will not facilitate their customers/account holders to transact in VCs/ICO Tokens……
SECP, in the exercise of powers under Section 40B of the SECP Act 1997, hereby directs all companies and Limited Liability Partnerships (LLPs) to ensure compliance with the aforementioned Circular of the State Bank of Pakistan in letter and spirit.
The commission further stated that the Regulated Persons shall also immediately report to Financial Monitoring Unit (FMU) any transaction in this regard as a suspicious transaction in compliance with Regulation (14) of the Securities and Exchange Commission of Pakistan (Anti Money Laundering and Countering Financing of Terrorism) Regulations 2018.
Any violation or contravention to this directive, inter alia, shall be construed as a contravention of Section 40A of the SECP Act 1997 and penalty shall be imposed accordingly, it added.