Urdubit, a leading Pakistani bitcoin exchange, has closed down permanently. The news came after the central bank of Pakistan announced a ban on dealings with cryptocurrencies. The trading platform urged customers to withdraw their funds “as fast as possible”. Its team confirmed on social media its operations had been suspended due to the prohibition of crypto transactions. Other exchanges have followed suit.
Also read: Pakistan’s Central Bank Prohibits Crypto Dealings with a Circular
Urdubit Cancels All Bitcoin Orders
Pakistan’s “first bitcoin exchange” announced its decision to shut down after the State Bank of Pakistan barred all financial institutions from processing crypto-related transactions. Urdubit warned its clients to withdraw both their fiat and crypto funds immediately. Through its accounts on Facebook and Twitter, and on its website, the platform said it was terminating services due to the central bank’s ban.
On April 6, SBP issued a circular on the “prohibition of dealing in virtual currencies”, effectively banning crypto transactions in Pakistan. The move came after a similar ban introduced by the central bank in neighboring India. SBP advised commercial banks and payment providers to refrain from using, trading, holding, and transferring digital coins. The document, signed by the State Bank’s director Muhammad Javed, stated that banks and businesses should not facilitate crypto transactions of their customers and account holders.
According to Pakistani media, the Karachi-based Urdubit is the country’s first bitcoin exchange. Launched in 2014, the platform gained popularity along with the world’s leading cryptocurrency. On Saturday its team said in a Facebook post:
Due to the current stance on virtual currencies by the SBP, we are closing Urdubit. Withdraw your funds as soon as possible! Please, buy BTC instantly, as we are canceling orders on, or withdraw your PKR [Pakistani Rupee] immediately.
Its website tells visitors: “Urdubit is shutting down! Withdraw your funds to your bank account or wallet!” The closure was confirmed via Twitter with a message published on Sunday: “Urdubit is closed. All bitcoin withdrawals will be closed today at midnight. Please, withdraw your funds.” The platform’s trading volume increased over the weekend following its decision to close down. According to Bitcoincharts, it traded 26 BTC on April 6 and 6 BTC on the next day.
The Future of Crypto Trade in Pakistan Is Unclear
The prohibition was imposed without an official government mandate and despite the lack of dedicated legislation on cryptocurrencies. Nevertheless, SBP asked Pakistani banks to “immediately” report any crypto transactions to the Financial Monitoring Unit (FMU). Furthermore, the central bank warned citizens against using cryptocurrencies to transfer money abroad. SBP also made it clear that virtual currencies like bitcoin are not considered legal tender in the country.
It remains unclear how many of Urdubit’s customers have managed to get their funds back. Small amounts of bitcoin have been traded after the closure on April 8. One of the warnings states that the exchange should not be held liable if clients failed to withdraw their money. There is no indication as to whether Urdubit intends to reopen again, in case the regulatory situation improves.
According to a company working with Urdubit, the exchange is trying to reimburse its customers. “Governments and banks are going to fight bitcoin because investing in it means a bank run on the central bank,” co-founder of Blinktrade Rodrigo Souza told the local online edition Propakistani. His company has been maintaining the open-source software used by Urdubit.
Other Pakistani exchanges have also decided to stay away from trouble with the SBP. A message on BTCPK’s website states that the price quotes are for informative purpose only. “BTCPK follows prohibition rules as set by the State Bank of Pakistan via Circular No. 03 of 2018,” the trading platform tells its customers. The exchange claims to be “the largest crypto market in Pakistan.”
Authorities in Islamabad have already demonstrated negative attitude towards cryptocurrencies in the past. Crypto traders have been targeted recently by the Federal Investigation Agency of Pakistan. SBP’s ban, however, is the largest clampdown on local cryptocurrency exchanges so far.
Do you think Pakistani exchanges will find alternative ways to provide services to the crypto community in the country? Share your thoughts on the ban in the comments section below.
Images courtesy of Shutterstock.
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