Asad Umar denies claims of legalization of Cryptocurrency

TechJuice > Cryptocurrency > Asad Umar denies claims of legalization of Cryptocurrency

By Muhammad Faisal on March 18, 2019

Update: Asad Umar has categorically denied the claims of the Business Recorder that legalization of cryptocurrencies might be in order and said that the update is not true.

Finance Minister Asad Umar has been given an all-clear sign by Pakistan’s premier intelligence agency to legalize Bitcoin Trade across the country, as reported by Business Recorder.The agency has suggested the ministry to register 5,000 cryptocurrency exchanges and dealers and asked the government to classify those currencies as an “investment” with tax subjected to all the profit gained.

The Finance Ministry is also advised to establish a national task force to monitor the flow of transactions through cryptocurrencies and bring the crypto business inside the formal tax regime.

The intelligence agency has also shared details about the policy, regulatory and enforcement plan with Finance Minister. These guidelines will help the ministry to effectively deal with the fast emerging trend of cryptocurrency (Bitcoin) trade in Pakistan, which is becoming an active hub for tax evasion.

The recommendations provide assistance and countermeasures to the finance minister for phase-wise implementation in June 2019 and December 2019.

The intelligence agency stated that “Irrespective of the option GOP adopts, i.e. declaring cryptocurrencies as legal or illegal, a robust oversight mechanism (mapping, investigation, and prosecution) will have to be put in place as soon as possible”.

They also added that there are more than 5,000 dealers/exchanges currently involved in this illegal trade of cash/online payment system, in roughly 100 cities of the country and it is increasing with a growth rate of 400% per year. This rapid increase in this illegal activity demands that the stakeholders must take quick and serious action against this situation.

The letter from the intelligence agency appraises the efforts made by the finance minister Asad Umar towards the revival of economy and the steps he took in countering the situation.

The intelligence agency mentioned how the fast emerging trend of cryptocurrency (Bitcoin) trade in Pakistan is providing an easy/anonymous platform for the tax evasion, money laundering (ML), TF and funding for other criminal activates. This poses serious implications for the GOP and can be a cause of embarrassment at the international level, especially in the absence of robust/comprehensive oversight mechanism to map/monitor the illegal business.

The finance minister’s office is requested to sensitize the relevant ministries/ departments/ law enforcement agencies about the said issue in order to initiate concerted efforts for the desired response. The following recommendations, way forward and countermeasures have been suggested:

1. Declaration of Crypto-currencies as legal: All such currencies have definite future prospects and are likely to cap the overall financial market in the near future. Pakistan also needs to capitalize on such business opportunities to her advantage like other modern countries instead of declaring these as illegal. The responsibility may be given to MOF/SBP and timeline should be June 2019.

2. Registration of Crypto-currency exchanges and individuals: In order to monitor/ bring under the tax net, the cryptocurrency/Bitcoin exchanges and individuals involved in trade need to be registered under Pakistan Stock Exchange(PSX) and Securities and Exchange Commission of Pakistan (SECP) for mapping/clear visibility purposes and to increase taxation. The responsibility may be given to MOF/SBP/SECP/PSX and timeline should be June 2019.

3. Classification of Cryptocurrencies: There is a need for new classifications of crypto-currencies as “an investment” with all net gains to be taxed.