On April 6, 2023, Pakistani banks, through the PBA, signed a contract to implement an electronic know-your-customer (KYC) system based on blockchain that will function nationally. The signing event took place at the PBA’s office in Karachi, and several officials, including Waqas Mirza, CEO of the Avanza Group, and association chair Muhammad Aurangzeb, were present.
The Avanza Group, a company with expertise in artificial intelligence, modern banking applications, blockchain applications, and client-experience management solutions, will create the platform. Pakistani authorities want to narrow the gap between their country and other Asian countries such as Singapore, Indonesia, Hong Kong and Thailand, which have already made headway with their CBDC initiatives.
The new program, named Consonance, is intended to support Pakistan’s State Bank plan to improve the country’s infrastructure for controlling money laundering and countering terrorism financing. The system will enable banks to share customers’ personal information through a self-regulatory and decentralized network. The PBA states that this personal information exchange will only happen with the customers’ permission.
The platform will enable banks to evaluate new and existing clients using information from KYC checks carried out by other organizations. The change aims to reduce onboarding expenses while promoting financial inclusion by simplifying the account opening process for customers.
Blockchain allows for the permanent storage of financial transactions in an unchangeable format. By doing this, Pakistan’s current financial system might become more transparent.
Pakistan is currently experiencing a financial crisis. Internally, the nation has recently experienced a wave of terror attacks in various regions. Last week, the value of Pakistan’s fiat currency in relation to the U.S. dollar fell to an all-time low of PKR 285 due to the ongoing recession.
As a result, the nation has been refocusing on integrating blockchain and cryptocurrency into its financial system. Pakistan has made the decision to choose and authorize organizations that will issue electronic money to support online transactions.
Pakistan’s Finance Minister Asad Umar noted in December 2022 that the country’s commerce industries trade will be strengthened by dabbling in the burgeoning blockchain sector, while giving it a fair shot at competing in the fintech sector with other countries.
Pakistan created three subcommittees in January 2022 to investigate the cryptocurrency industry from all perspectives before the country makes a final decision regarding its position on its legalization.
According to a Chainalysis report, India and Pakistan, the second and third highest crypto adopters globally, have dropped to fourth and sixth place this year due to legal uncertainty.
This development in Pakistan is likely to be well received by companies such as Coinbase Global Inc. (NASDAQ: COIN) within the blockchain space because it shows that the industry is being taken seriously by major institutions around the world.
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