ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Wednesday published an outline of digital assets to seek proposals for regulating the market as it enters “the new era of digital finance”.
In its position paper, the SECP acknowledges the critical need to formulate regulatory measures for the virtual industry. According to the regulatory watchdog, a virtual asset is a digital representation of value that can be digitally traded, or transferred, and can be used for payment or investment purposes.
It said that even though the full-scale misuse of virtual currencies, provided the reluctance to regulate it, is unknown; however, its market value has been reported to exceed €7 billion worldwide.
After comparing the proposed framework for crypto assets in other countries, SECP is of the view that regulating this regime of digital finance will hike capacity in financial markets while allowing more liquidity flow in secondary markets of the country.
The SECP noted in its position paper that regulators worldwide, while realizing the potential of digital assets and the uncertainty around them, need to start assessing the risk associated with digital assets as well.
It said whatever innovation it can bring to the financial sector can only be assessed if regulatory frameworks to protect investors and make larger financial inclusion a possibility are in place.