Pakistan may soon become one of the countries where the use and trade of Bitcoin have been legalized. That may be a good thing, but the essence is to make it easy to track money laundering through the use of Bitcoin and also make tax deductions, reports a media outlet on March 18.
Premier Intelligence Agency Recommends Legalizing Bitcoin
Per the report, Pakistan’s premier intelligence agency in a letter advised Asad Umar, the country’s Finance Minister to legalize Bitcoin because it has future prospects. The agency also stated that instead of tagging cryptocurrencies ‘illegal’, the country can take advantage of the business opportunities they offer.
Further reports reveal that there are over 5,000 cryptocurrency dealers in Pakistan spread across 100 cities and these dealers tend to grow at a rate of 400 percent per year. However, a tax is not levied on them due to the anonymous nature of cryptocurrency transactions which makes tax evasion easy.
Reviving the Economy by Reducing Criminal Activities
In the same vein, the intelligence noted that there is a need to revive the economy by taking steps to reduce the use of virtual assets to commit a crime. According to them, the anonymity of these assets makes them an easy target for money laundering and the financing of other criminal activities.
Therefore, the agency has outlined a policy, regulations, and enforcement plan which will guide the operation of dealers in the country. Recommendations have also been made that the plan should be executed in two phases, first in June 2019 and then in December 2019.
Cryptocurrency Dealers Should be Made to Register
One of such recommendations is that cryptocurrency exchanges and dealers should be made to register with the Pakistan Stock Exchange(PSX) and Securities and Exchange Commission of Pakistan (SECP). Another is the classification of cryptocurrencies as an investment in order to enable tax to be levied on their trade.
The agency also said:
Monitoring of crypto-currencies.. is the most difficult part which needs specific expertise/laws through which crypto-currency trade being carried out via hidden platforms needs to be brought under a registered banner
While the intentions to legalize the use of Bitcoin and other cryptocurrencies in Pakistan may be music in the ears of investors in the area, it may not really go down well with investors who will be affected by the tax. There have been several reported cases of investors making huge profits and losing them only to still be levied tax.