- The Peshawar High Court has ordered the federal government to eliminate illegal crypto trading in Pakistan within two months.
- The court directed financial institutions and payment providers to cut ties with all virtual currency-related services.
- Despite existing bans, unregistered firms continue to offer crypto and forex trading, prompting calls for strict legislation and enforcement.
The Peshawar High Court (PHC) has ordered the federal government of Pakistan to act on the rising illegal threat posed by cryptocurrency trading. The court reportedly ordered the total elimination of the unlawful activity of crypto nationwide within two months.
Court Demands National Strategy to Combat Illegal Crypto Activities
The court stressed that a comprehensive National strategy to prevent illegal digital currency transactions in the province of Khyber Pakhtunkhwa is needed. The federal government has also been directed to provide a detailed report on how it intends to respond to the problem. The ruling was given by a two-member bench of Justice Syed Arshad and Justice Dr. Khurshid Iqbal.
The case was initiated on a private petition filed by Barrister Huzaifa Ahmad who came on the records and represented himself. Ahmad also highlighted in his petition the launch of digital currencies in the modern technological era. He contended that it is now feasible to transfer digital money electronically, which is not bound by any legal framework or formal legal slant about how it can be used in Pakistan.
Deputy Attorney General Bilal Durrani represented the federal government in court. The petitioner cited that the State Bank of Pakistan (SBP) declared such internet-based commercial transactions illegal in a 2018 notification. The SBP circular stated that digital assets were not authorized to purchase or exchange goods and services.
“Virtual Currencies (VCs) like Bitcoin, Litecoin, Pakcoin, OneCoin, DasCoin, Pay Diamond, etc., or Initial Coin Offerings (ICO) tokens are not legal tender, issued or guaranteed by the Government of Pakistan. SBP has not authorized or licensed any individual or entity for the issuance, sale, purchase, exchange, or investment in any such Virtual Currencies/Coins/Tokens in Pakistan,” the circular read.
Financial Institutions Ordered to Cut Ties with Crypto Ventures
The Peshawar High Court (PHC) has intensified its stance against illegal cryptocurrency activities in Pakistan by extending its directives to financial institutions and payment service providers. The court ordered that all payment system operators (PSOs) and payment service providers (PSPs) refrain from facilitating services linked to virtual currencies.
“In view of the foregoing, all Banks, Development Finance Institutions (DFIs), Microfinance Banks, and Payment System Operators/Payment Service Providers are advised to refrain from processing, using, trading, holding, transferring value, promoting, and investing in Virtual Currencies/Tokens,” the court emphasized, citing the State Bank of Pakistan’s 2018 circular that declared such transactions unlawful.
Despite these prohibitions, the petitioner, Barrister Huzaifa Ahmad, claimed that individuals and firms use various online platforms to conduct cryptocurrency transactions. He pointed out that several coaching centers and training academies in Khyber Pakhtunkhwa offer Bitcoin and Forex trading services and promote them through social media channels such as TikTok, Facebook, and YouTube.
Peshawar High Court Orders Investigation into Digital Trading Networks
The Peshawar High Court has ordered a formal investigation into illegal crypto trading activities. The petitioner asserted that traders and operators have long been conducting these transactions, digitally collecting, withdrawing, and freezing funds online—without facing any regulatory action. He stated that despite repeatedly writing to the relevant authorities over the years, no practical steps have been taken to curb these practices.
According to the Securities and Exchange Commission of Pakistan (SECP), firms engaging in such financial services must register under securities exchange laws. However, the petitioner highlighted that these companies and training academies operate without registration, even though they could contribute tax revenue to the national exchequer. He further warned of the risks associated with digital assets, including their potential misuse for money laundering and terrorist financing.
“These types of trade could seriously compromise national security,” Ahmad warned. “Therefore, it is the responsibility of both the federal and provincial governments to ban these illegal businesses and close down the institutions and academies involved in crypto and forex trading, as they may be used to facilitate terrorism, gambling, and other anti-state activities.”
Court Awaits Legislative Action, Sets New Deadline
Ahmad also requested the court to force the government to introduce legislation prohibiting the illegal operations of crypto and direct enforcement agencies such as the Federal Investigation Agency (FIA) to act strictly. Deputy Attorney General Bilal Durrani informed the court in response that the government had drafted relevant legislation and was still finalizing it; however, it would take about one month to complete.
In this case, the PHC, comprising Justice Syed Arshad and Justice Dr. Khurshid Iqbal, spelled out the time frame and directed the federal government to formulate and bring before them a national crypto policy within two months. The court took a significant amount of time to hear the appeal, pushing it aside and telling the government to submit a working policy up to the hearing period.
