Pakistan’s first Digital Currency is ready to be launched after the Government of Pakistan banned the trade of all cryptocurrency in the country. The deputy governor of the State Bank of Pakistan (SBP) has announced that Pakistan is set to launch its first digital currency within two months once all necessary preparations are completed.
According to Arab News, the SBP is leading the initiative to create Pakistan’s first Digital Currency. Central bank digital currencies (CBDCs) are increasingly being considered as potential replacements for physical cash. They are digital versions of traditional cash and are issued and regulated by state-owned banks.
In 2018, Pakistan’s central bank declared virtual currencies (VCs) such as Bitcoin, Litecoin, Pakcoin, OneCoin, DasCoin, and Pay Diamond illegal, prohibiting their use in trading. Compared to cryptocurrencies, CBDCs offer enhanced security and are designed to work alongside physical cash and traditional electronic money.
These currencies are built on blockchain technology, specifically distributed ledger technology (DLT), which ensures secure and efficient digital transactions. The Deputy Governor of SBP said, “The groundwork (of the digital currency) has been completed and [the SBP] will run a pilot that is called sandbox so that we could carefully examine it. The sandbox will be launched in a month or two.”
Deputy Governor of the SBP, Sima Kamil, stated that Pakistan’s first Digital Currency would undergo a pilot launch within two months once the necessary preparations are completed, as reported by Arab News. Kamil further mentioned that a sandbox, a controlled environment for testing new products, services, or business models under supervision, would be launched in the coming month or two to help with the launch of Pakistan’s first Digital Currency.
The integration of digital currency aligns with the SBP’s long-term plan, “SBP Vision 2028.” Despite the presence of significant investors in digital currencies, the financial regulator has maintained reservations about legalizing them within the country. Bitcoin, Litecoin, Pakcoin, OneCoin, and DasCoin were ultimately declared illegal.
Read more: Cryptocurrency Services Permanently Banned in Pakistan
The idea to introduce Pakistan’s first Digital Currency originated from the banking regulator. The deputy governor of SBP emphasized the distinction between cryptocurrencies and central bank digital currencies (CBDCs).
CBDCs are designed to complement existing physical cash and traditional forms of electronic money, providing heightened security compared to cryptocurrencies. These digital currencies, built on blockchain technology (DLT), aim to offer a secure and efficient means of conducting digital transactions.
According to the Atlantic Council CBDC tracker, a few countries have already launched CBDCs, including Nigeria, Jamaica, and the Bahamas. Meanwhile, other nations like China, India, Saudi Arabia, France, Ghana, Canada, and Uruguay have initiated pilot programs to explore the potential of CBDCs.