Pakistan proposes amendment to SBP Act to allow central bank to issue CBDC

The Pakistani government has proposed amendments to the SBP Act, which may indicate that it is trying to legalize cryptocurrencies, marking a shift in the country's financial policy. The amendment will allow the Central Bank of Pakistan (SBP) to issue digital currencies and manage the country's currency in physical and digital forms. In addition, it includes granting SBP the power to conduct CBDC business, saying that CBDC can operate as legal tender. In addition, SBP plans to set up a subsidiary to develop and operate digital payment systems. The proposed amendments also propose penalties for unauthorized issuance of digital currencies, with a fine equivalent to twice the value of the illegally issued currency. Although the federal cabinet has not announced a specific timetable for approving the amendments, the changes are likely to shift the focus to regulatory oversight and the inclusion of digital currencies in Pakistan's financial framework. The amendments will also expand the powers of the SBP board of directors, enabling it to approve a wider range of financial reports and strengthen governance processes. It is understood that the SBP has historically classified cryptocurrencies such as Bitcoin as illegal currencies and warned about the associated risks, especially emphasizing the lack of legal protection for financial losses caused by the high volatility of cryptocurrencies. (The Express Tribune)