The Securities and Exchange Commission of Pakistan, also known as SECP, is working to develop a regulatory framework for cryptocurrencies. The report comes according to a paper on private digital assets that the SECP published on November 6th. The SECP further said that it “welcomes any input/comments.”
The document’s stated purposes include to create a “definition to recognize digital assets in Pakistan,” as well as to find a “way forward for designing and developing a robust regulatory regime at par with the World for regulating Digital Assets,” as well as to “present policy proposals to industry participants and stakeholders.”
Importantly, though, the SECP’s report does not contain any information on plans for the creation of or regulation of a Pakistani central bank digital currency (CBDC), though the country has announced that it will develop a CBDC by 2025. Rather, the SECP’s report focuses exclusively on private digital assets, specifically, security and utility tokens.
Two Regulatory Approaches: Use Existing Regulations, or ”Let Things Happen”
Notably, the SECP seems to use the document as an opportunity to emphasize that digital assets are the “start of a new era of digital finance”; the regulator also says that this new era “could only be possible by the initiation of a new era that re-invents regulatory regime [or] measures as they are known to the regulators globally today.”
The paper outlines two possible approaches that are “available” for regulating digital assets.
The first of these is described as “regulating and restricting new products according to existing regulations, and may in some instances even entail outright banning,” the paper said. “Under this approach, innovators are obliged to adapt to the prevailing regulatory environment.”
The second method is “based on the conjecture of ‘let-things-happen’ approach, described by the [United States] Commodity Futures Trading Commission (CFTC) as the ‘do-not-harm’ approach (Giancarlo, 2018), where the financial sector is considered as dynamic and the associated need to innovate is strongly emphasized.”
While the paper was “mainly prepared based on the second approach,” the document did not explicitly say that this approach was more appropriate for building regulations in Pakistan.
Pakistan Prepares for the Age of Digital Assets
The paper is the latest development in a series of steps that Pakistan has taken towards adopting new frameworks for digital money and cryptocurrency assets.
CoinTelegraph reported last year that the country was developing plans to introduce new digital regulations for institutions that deal with electronic money. Additionally, as previously stated, the country announced that it was working to launch a CBDC by 2025.