Key Takeaways
- The Lahore High Court has ruled that peer-to-peer cryptocurrency transactions are not illegal.
- The court upheld the pre-arrest bail of three individuals accused by FIA in a crypto-related case.
- Cryptocurrencies are not recognized as legal tender but are not illegal, according to the judgment.
In a significant ruling, the Lahore High Court (LHC) has declared that peer-to-peer (P2P) cryptocurrency transactions and receiving related funds in a bank account do not constitute fraud or an electronic crime. The court's detailed 15-page judgment was delivered by Justice Tariq Saleem Sheikh.
The case involved three individuals accused by the Federal Investigation Agency (FIA), who were granted pre-arrest bail based on the LHC’s ruling. The complainant alleged that he transferred nearly Rs. 686 million to purchase around 270,000 USDT after being persuaded by an acquaintance to invest in cryptocurrency.
The court emphasized that merely transferring virtual assets or receiving money through a bank account is insufficient to establish offences such as fraud, forgery, or violations under the Prevention of Electronic Crimes Act (PECA).
Justice Sheikh stated that investigators must prove specific acts of deception, creation of forged electronic records, or direct responsibility for freezing the complainant’s account. The court found no evidence supporting these claims and allowed the accused to remain on pre-arrest bail.
The judgment clarified that while cryptocurrencies are not recognized as legal tender in Pakistan, this alone does not make them illegal. It noted that the State Bank of Pakistan's 2018 circular restricts regulated financial institutions rather than private individuals, and personal crypto trading is not criminalized.
Furthermore, the court ruled that buying or selling USDT does not violate foreign exchange laws unless prosecutors can establish an illegal foreign exchange transaction. The complainant’s claim that his crypto account was frozen lacked sufficient evidence to support a criminal charge.
The ruling has significant implications for individuals involved in cryptocurrency trading and transactions within Pakistan, providing clarity on the legal status of such activities.
