Cryptocurrency regulation in South Asia is diverging

Significance

Regulators worldwide are concerned about the impact of cryptos on systemic financial and political risks, yet progress on policy frameworks has been slow and the stance has varied. This is clearly evident in South Asia.

Impacts

• Given global fears about the destabilising effects of cryptos, countries are likely to favour regulation over bans.
• Terrorist financing using cryptos is a major risk, especially in Pakistan.
• The role of CBDCs as a store of value will lead to a conflict of interest between central and commercial banks.