Digital asset authority formed to meet FATF requirements

In a bid to ensure that Pakistan’s Virtual Asset Economy complies with safeguards set by the Fina­ncial Action Task Force (FATF), the federal government has decided to set up the Pakistan Digital Assets Authority (PDAA). According to details from reports, PDAA will be responsible for regulating digital assets and ensure that processes do not violate FATF’s regulations.

As per a statement issued by the Ministry of Finance (MoF), officials from the ministry will initiate a strategy to accelerate the growth of Pakistan’s virtual asset economy while simultaneously regulating the digital asset space. The Pak­istan Cryptocurrency Cou­ncil (PCC) has recommended a general outline of tasks for the PDAA.

Reports indicate that the tasks include ensuring economic inclusion, responsible adoption of virtual assets and to regulate financial infrastructure that is based on the blockchain. The purpose of regulation lies in ensuring that innovations are in accordance with FATF’s rules.  

Finance Minister Muhammad Aurangzeb, also PCC’s chairman, outlined how Pakistan’s goal is “not just to catch up but to lead”. He highlighted that this was possible via regulation and with the PDAA, Pakistan will get catapulted to a leading role in global financial innovation.

The PCC’s chairman further elaborated on the PDAA’s importance as its regulations could protect consumers and attract international investments - as regulation reduces risk.

As per reports, he emphasized how the newly created PDAA is responsible for matters pertaining to digital asset compliance, licensing and innovation. The body is expected to regulate tokenized platforms, digital stablecoins, DeFi applications, wallets and exchanges. 

Analysts have pointed out how Pakistan’s decision to lean into crypto and the digital asset space places it in the rank and file of leading economies such as those of Singapore, Japan, Hong Kong and the UAE. Reports confirm that the aforementioned countries have set up regulatory bodies of their own to oversee activities occurring in the digital asset space.

The establishment of such bodies reportedly allows for the host country to remain compliant with international financial laws while also promoting innovation. Details from reports suggest that the PDAA will be able to yield positive returns from the domestic electricity surplus via regulated crypto mining.

Aside from attracting investments, reports suggest that PDAA may regulate over $25 billion of the informal crypto market and tokenize government debt and national assets.

Reports indicate that the PDAA may also assist startups to design and launch block-chain based solutions. If managed effectively, the PDAA could allow Pakistan to become a major competitor to existing players in the international virtual asset economy.