Sounds Familiar: #Pakistan #Bitcoin Surges While Gov’t Crushes #Cash. #Demonitization #India https://cointelegraph.com/news/sounds-familiar-pakistan-bitcoin-sur... … via @Cointelegraph

In the week the country’s Senate advised the scrapping of its highest value banknote, Pakistan’s Bitcoin trading volume has shot up almost 400%.

The Senate resolution, which was adopted even though the Pakistani government opposes it, would see the 5000 rupee note removed “to reduce illicit money flow.”

Cash war copycat

Multiple news agencies report that Pakistan is aiming to counteract illegal activities conducted with cash and that the move could be a copycat of India’s rupee removals in November.

Reuters reports a Senate angle that has fewer high-value notes “would encourage the use of bank accounts and reduce the size of the undocumented economy.”

Ironically, India has previously indicated one of the reasons behind its moves to replace cash in its economy was to curb money forgery originating in Pakistan.

As its replacement notes came into circulation, the Indian press reported them already being recovered from “terrorists” in Kashmir.

According to the Senate, however, Pakistan’s reforms would be in a different style to those over the border. Notes would be decommissioned not within a matter of days, but years.

Pakistani FinTech lies in wait

Nonetheless, the announcement appears to have added fuel to an already expanding Bitcoin exchange market suddenly exploding with new interest. Unlike India, though, the Bitcoin economy of Pakistan still leaves something to be desired in terms of facilities.

Local Bitcoin exchange Urdubit recently took part in a workshop specifically aimed at cracking customer penetration for startups offering digital economy-related technologies.

“Despite the high potential, a majority of Pakistani SMEs are yet to adopt e-commerce or are sub-optimally engaged,” a press release on the event last month stated.

Organizer Ali Sarfraz Hussain added that “although Pakistan is a latecomer to this sector, e-commerce is rising massively and e-commerce players are mushrooming in the country.”

Pakistan is just the latest economy to toy enter the war on cash. India is not alone, Venezuela and Australia have already launched or are considering their own cash reforms.

#Tax Authorities In #Pakistan Zero In At #Bitcoin Traders. #FBR #SBP https://cointelegraph.com/news/tax-authorities-in-pakistan-zero-in-... … via @Cointelegraph

Tax authorities across the globe have set their sights on Bitcoin traders. The latest to join the set is the FBR (Federal Board of Revenue) in Pakistan.

Bitcoin in Pakistan
While Asian countries like Japan, China and South Korea have been in the news for people taking a fancy to Bitcoin, adoption in Pakistan has been low key.

The first Bitcoin exchange in Pakistan, Urdubit, was established in 2014. There is tremendous potential for Bitcoin in Pakistan, with the country receiving remittances of $20 bln every year. Pakistan also has a vibrant freelance economy, with estimated revenue of $1 bln.

Wider adoption of Bitcoin can bring efficiencies in both remittances and payment for online freelancing.

Windfall profits
The recent rapid increase in Bitcoin price has meant that Bitcoin investors were able to reap windfall profits. Not all of them declare this income, resulting in scrutiny from tax authorities.

In the US, the IRS served a John Doe summons to Coinbase, asking it to hand over details of US customer transactions. The IRS had sought details of customer transactions between 2013 to 2015, much before the current bull rally.

In Pakistan, the volume of Bitcoin transactions has recently increased, leading to the intelligence department of the FBR launching an investigation.

The objectives of the FBR are two-fold – detect cases of tax evasion as well as money laundering. According to tax officials, major traders of Bitcoin have not reported their business profits to tax authorities and hence a summons has been issued.

Cracking down
The State Bank of Pakistan does not recognize cryptocurrencies, including Bitcoin. Cryptocurrencies are traded as commodities and the government has not shown any indication that it would either regulate or impede cryptocurrency transactions.

The focus of the current government action seems to be restricted to cracking down on cases of money laundering and tax evasion. The government will find it tough to restrict its people from purchasing a deflationary currency when the average rate of inflation in Pakistan during the last 60 years is 7.8 percent.

#Pakistan’s Central Bank Aims to Issue Its Own #digitalcurrency by 2025, says an announcement made during a ceremony to launch of Electronic Money Institutions (EMIs) on Monday, April 1, 2019. #payments https://cointelegraph.com/news/pakistans-central-bank-aims-to-issue... via @cointelegraph

Jameel Ahmad, the deputy governor of the State Bank of Pakistan (SBP), the nation’s central bank, declared that the institution aims to issue a digital currency by 2025, Pakistani YouTube news channel Public News reported on April 1.

English-language local media Dawn also reported today that Asad Umar, Pakistan’s finance minister, prompted the official’s statement during a ceremony celebrating the launch of Electronic Money Institutions (EMIs) on Monday, April 1.

According to Dawn, the minister asked the federal investigation agency and the central bank to ensure that the new system will feature cybersecurity. Umar purportedly claimed that a single high profile incident could irreparably damage trust in the banking system.

As part of his response, the central bank’s deputy governor, Ahmad, then declared that the institution is already working on releasing its central bank digital currency (CBDC) concept by 2025. According to the official, the aim is to promote financial inclusion and efficiency and combat corruption. The complete deployment of the CBDC, however, is set to happen by 2030.

As previously reported, Pakistan is implementing new cryptocurrency regulations in an effort to improve its track record fighting financial crime.

As Cointelegraph reported in February, Ukraine’s central bank has completed a pilot scheme for its own national digital currency, the e-hryvnia.

During the same month, the Oxford Business Law Blog published a research report conducted by a postdoctoral researcher from the University of Luxembourg noting that the idea of issuing a CBDC is too attractive to ignore.

#Pakistan to Set up Two State-Owned #Bitcoin Mining Farms to Help Boost #Economy. The capacity of the mining farms or the funds that the state intends to invest in the project are not known yet. #KP has previously advocated friendly crypto laws. https://news.bitcoin.com/pakistan-to-set-up-two-state-owned-bitcoin... via @BTCTN

The government of Khyber Pakhtunkhwa (KP), the third largest of Pakistan’s four semi-autonomous provinces, is setting up two state-backed bitcoin mining farms, local media reported last week.

Ziaullah Bangash, advisor to the chief minister of KP on Science and Information Technology, said the provincial parliament passed a bill allowing the KP government to use its own money to establish the mining facilities.

The province, which has since legalized crypto mining, will be mining bitcoin (BTC) for profit, BOL News, a local media organization, reported. No details were given about the capacity of the mining farms nor the funds that the state intends to invest in the project. This particular province has previously advocated friendly crypto laws in Pakistan.

According to Bangash, the KP Assembly also passed a separate no-objection certificate allowing individuals to mine cryptocurrency and issue their own digital assets. The development coincided with the launch of a private bitcoin mining farm by Waqar Zaka, a long-time crypto enthusiast who has worked to develop the Pakistani crypto industry.

“After years of struggle, I am launching the biggest crypto mining farm in KPK where you all can invest & earn,” Zaka said in a tweet. He thanked Bangash for his legal backing. Replying, Bangash stated that “in future, the help of Waqar Zaka will be sought” in the KP administration’s crypto mining plans.

Profits from bitcoin mining may help prop-up Pakistan’s ailing economy, but KP must first overcome the country’s long-running electricity crisis. Pakistan is facing severe electricity shortages, with power cuts a common occurrence.

Last Saturday, the entire country was thrown into darkness, the Financial Times reports. Authorities blamed the blackouts on a “technical fault” at one of the country’s main power plants in the south. Pakistan only started to restore power in bits on Sunday.

Now BTC mining — the process by which new bitcoins are created using sophisticated, super-computers — is not only an energy-intensive venture but also one that demands consistent power supply. Situated in north-western Pakistan, a mountainous, cool region along the border with Afghanistan, KP might have the best weather for bitcoin mining. But will it have enough energy to sustain a profitable operation?

Crypto terror: Pakistan warns of digital currency crime spike

https://www.arabnews.com/node/1803931/world


Police in Pakistan say the use of digital currencies, including bitcoin, for international terror financing, as well as crimes such as extortion and ransom, is on the rise as authorities move to crack down on illegal methods of money transfer.
Bitcoin is the most common virtual currency and is used as a vehicle for moving money around the world quickly and anonymously via the web without the need for third-party verification.
Militant groups worldwide, including Daesh, are increasingly calling on supporters to donate using the digital currency.
Pakistan recently moved to meet 27 targets set for it in 2018 when the South Asian nation was placed on a Financial Action Task Force (FATF) “grey list” of countries with inadequate controls over terror financing. The task force has urged Pakistan to complete an internationally agreed action plan by February 2021. The next virtual plenary of the task force is scheduled for February 22-25.
“We are seeing this trend (of using bitcoin for crimes) since we tightened the noose around illegal systems of transferring funds,” Raja Umar Khattab, head of the Transnational Terrorists Intelligence Group in Sindh’s counterterrorism police, told Arab News.
Last month, Khattab arrested Hafiz Muhammad Omar bin Khalid, a Pakistani engineering student charged with sending bitcoin donations to militants in Syria.
Khalid had transferred over Rs.1 million ($6,200) when he was caught, according to Omar Shahid Hamid, counterterrorism department (CTD) deputy inspector general.
The student had also previously been arrested, and released, in 2018 for extending financial support to an Al-Qaeda militant in Afghanistan, officials said.
In December 2019, Khalid came across a Telegram account online that guided him on how to help the widows of Daesh militants in Syria.
“Help jihadis and their families by sending money through bitcoin,” said one user on the Telegram group, leading Khalid down a rabbit hole of searches into bitcoin wallets. That, in turn, led him to an associate named Zia Shaikh Turk, based in Hyderabad, who converted cash into bitcoin and sent it off to “jihadi brides” in Syria, according to Hamid.
The Pakistani widow of a militant, whom Khalid identified as Umm-e-Bilal, also asked him to open a mobile wallet account, according to interrogation reports made available to Arab News.
“Umm-e-Bilal asked me to open an EasyPaisa (Pakistani digital payment system) account as some of her acquaintances hadn’t heard of bitcoins, but wanted to contribute,” one intelligence report said, quoting Khalid. “I got Rs. 450,000 into my account, added another Rs. 100,000 of my own, converted them into bitcoin and sent them to Syria.”
Last year, a US citizen of Pakistan origin, Zoobia Shahnaz, was sentenced to 13 years’ imprisonment for providing material support to foreign militant organizations, specifically more than $150,000 to Daesh.
Shahnaz, 27, from Long Island, admitted to wiring more than $150,000 to individuals and shell entities that were fronts for Daesh in Pakistan, China and Turkey in 2017. She was engaged in a scheme to scam Chase Bank, TD Bank, American Express and Discover by fraudulently obtaining six credit cards, according to a court filing. She then bought more than $62,703 in bitcoin and other cryptocurrencies, and converted them into cash.
An official at the Federal Investigation Agency (FIA) told Arab News the unit had received numerous complaints in recent months by victims asked to pay ransom and extortion in the form of bitcoin. The official did not go on the record as he was not authorized to discuss the cases with the media.
“Cryptocurrency has been used in international as well as local cases of extortion, kidnapping for ransom, harassment and money laundering as there is no centralized monitoring system,” the official said.