Crypto Trading: Gulf Stock Exchange Seeks To Enter Pakistan – Avis

KARACHI: Bahrain-based Rain Financial, a cryptocurrency trading platform, is persuading local regulators to issue a legal framework for formalizing cryptocurrency trading in Pakistan.

Speaking to Dawn in a recent interview, Rain Financial Country CEO Zeeshan Ahmed said that trading in cryptocurrencies – digital currencies in which transactions are verified and recorded by a decentralized system – currently exists in a regulatory “no-man’s land”.

“No law declares crypto illegal. Have authorities wrinkled their noses of crypto? Yes. But issuing a declaration is one thing, and translating it into law is another,” he said.

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Former central bank governor Dr. Reza Baqir said in March that the risks of using cryptocurrencies outweigh the benefits. Earlier, the central bank issued a formal announcement advising the public to exercise caution and refrain from trading in cryptocurrencies.

“Negotiations are underway. These are high-impact decisions that involve many ideas and proposals,” Mr Ahmed said, expressing hope that the authorities will realize the benefits of formalizing an activity that is already taking place outside the regulatory framework. .

According to the data platform Chainalysis’ website, Pakistanis recorded over $ 604 million in profits from crypto trading in 2021. Pakistan is also among the top ranked countries in the Global Crypto Adoption Index. This is despite the fact that the central bank does not recognize cryptocurrencies as a legal tender and as such has not authorized any exchanges to facilitate their trading.

Yet Pakistanis trade digital coins on crypto exchanges like Binance in peer-to-peer transactions. In short, buyers and sellers agree to trade coins on the swap app, which leads to the same assets being deposited in a blocked / frozen account. The buyer then transfers money to the seller within a short period of time and presents the proof of payment to the trading platform to take possession of it. Alternatively, you can use a hundi / hawala channel to buy or sell coins on a crypto exchange. The unregulated structure of trade means that the government does not receive any tax on capital gains earned by investors.

“We believe in regularized and licensed platforms. When we want to enter a market, we first engage the regulator and show them the added value and benefits (of cryptocurrencies). Unregulated markets like Pakistan face capital flight and risks for individuals and institutions,” he said. Ahmed.

Rain Financial was incorporated into Bahrain’s central bank sandbox in 2017 as a crypto-active company. The federal monetary authority issued a cryptopolitical framework in 2018, and the company received its license in 2019.

Ahmed said the stock market is an important crypto-trading platform in the markets in which it already operates. The estimated crypto-trading volume in 2021 was close to $ 100 billion. “Our stake was $ 2 billion. As a regional player at the moment, we are on track to become a global player,” he said.

Crypto enthusiasts highlight digital currencies as a reliable medium of exchange, a store of value, a hedge against inflation and a safe investment in the event of disasters – features that are conspicuously lacking in the more than 10,000 cryptocurrencies that exist today.

Rain Financial’s bid to enter the Pakistani market could not have come at a less convenient time. No less than $ 2 trillion has been obliterated from the combined market value of cryptocurrency in the last six months. The crash is so large that China’s blockchain-based service network, a government-affiliated initiative to promote the commercial use of blockchain technology, has called cryptocurrencies the world’s largest Ponzi scheme.

Sir. Ahmed said short-term setbacks should not be interpreted as the final verdict of history. The continued development of cryptocurrencies, he says, is as important an event as the industrial revolution.

“This volatility seems excessive in the short term, but it is not. The global (crypto) adoption (rate) is only 7%,” he said, noting that volatility will fall in the long run.

Mr. Ahmed expects Pakistan to be a large-volume, low-transaction market for Rain Financial once regulators allow formal cryptocurrency trading. About 2 million Pakistanis have so far downloaded crypto exchange apps. The number is likely to quadruple when authorities provide legal coverage for cryptocurrencies, he said.

“Within a year (after the exchanges are formalized), I expect 70-80 million Pakistanis will trade $ 7-10 in cryptocurrencies a month each,” he said. .

Published in Dawn, July 13, 2022

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