If you ever wanted an indication of which countries value their citizen's freedom over their control over their citizens, then it has to be how they approach bitcoin. I often talk about how bitcoin banning is a good thing and I stand by that, especially when it's more established countries with strong economies.
When it's smaller nations with weak economies, I often think you're looking a gift horse in the mouth a move I think Pakistan is making that mistake.
While its neighbor India has flip-flopped on bans and now looking to tax the tits off crypto holders, Pakistan is looking to straight up ban bitcoin.
Pakistan asks bitcoiners to pack it in
The government of Pakistan and its central bank want to ban the use of bitcoin and cryptocurrencies after local media got hold of a document submitted to a provincial court.
The document was compiled by a committee headed by Sima Kamil, a deputy governor of the State Bank of Pakistan (SBP). Other members included representatives from the Ministry of Finance, the Securities and Exchange Commission of Pakistan (SECP), and the Federal Investigation Agency of Pakistan (FIA). When you see 3 and 4 letter agencies involved, you know it has to be legit.
Pakistan has been pretty laid back when it comes to bitcoin and this submission is the first time a clear position has been taken by their central bank.
The only previous regulatory guidance was back in 2018, after the 2017 run and blow off the top which was understandable. The SBP issued a circular prohibiting banks from dealing with cryptocurrency exchanges. If anyone looked at the shitcoin bonanza going on, they'd want to keep people's money out of the hands of obvious scams too.
Reducing the chance of escape
Like many countries with financial troubles, Pakistanis have been embracing bitcoin and look at it as a way to get out of their local currency and to do cheaper remittances without limitations on the amount they need to transfer. Yes among them are traders and speculators, but you can't stamp out one without the other.
There is indeed a massive motivation to move into bitcoin and stable coins as Pakistan struggles with a currency devaluation, high inflation, along with a growing current account deficit, and dwindling foreign reserves.
If we take a look at the PKR compared to the dollar it's lost more than half its value when compared to the dollar over the last 15 years.
If we look at the PKR in terms of bitcoin, we can see it hovers around 7 million PKR after having topped out at 11 million PKR.
If we compare it to gold it's lost more than half its relative strength in only 5 years, as the currency continues to devalue to cover its debt obligations.
The devaluations will only speed up and get worse over time and locking locals into the pain is the only way central banks can keep it going. If there is an escape valve-like bitcoin, devaluations will have a free market force pushing it down and it won't be a controlled demolition.
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