By Muskan Naveed ISLAMABAD, Feb. 28 (INP-WealthPK): Cryptocurrencies have taken the world by storm as the concept of decentralisation provides an attractive alternative to the modern capitalist society. A report on cryptocurrency has provided shocking revelations for the country where cryptocurrencies have been largely discouraged by governmental institutions. The Federation of Pakistan Chambers of Commerce and Industry’s (FPCCI) Policy Advisory Board released a report on cryptocurrencies and the findings left the country in shock. Pakistan recorded $20 billion worth of cryptocurrencies in 2020-21. The country also ranks third in the Global Crypto Adoption Index in 2020-21 – second only to India and Vietnam. The State Bank of Pakistan (SBP) had advised the general public to refrain from investing in cryptocurrencies, but stricter measures are required if the central bank wants to curb crypto investments. Challenges posed by cryptocurrencies Cryptocurrency transactions are completely anonymous and untraceable. Since the technology advocates decentralisation, there is no central monitoring authority which can overlook the market. This leaves users exposed to many risks and financial frauds. Another downside of cryptocurrencies is that unlike fiat currencies, these digital assets do not have any real value. They are not backed by any asked which makes the current price of Bitcoin of $47,422 purely based on speculation. The cryptocurrency frenzy is regarded by many critics as equivalent to a bubble – and bubbles inevitably burst. The International Monetary Fund has considered cryptocurrencies to be a threat to the current global financial ecosystem and if adoption continues at the current pace with little to no regulation, the world can possibly witness a repeat of the global financial crisis of 2007-08. Experience from China China has not been friendly to cryptocurrencies because the untraceable and decentralized nature of these digital assets make them susceptible to unlawful activities. The country imposed a blanket ban on cryptocurrencies during September 2021. National and international financial institutions are banned from providing cryptocurrency services to Chinese residents which are regarded as illegal financial activities. Moreover, cryptocurrency mining had also been jeopardising China’s goal of carbon neutrality as crypto mining was expected to generate more than 130 million metric tons of carbon emissions by 2024. Hence, the National Development and Reform Commission launched a country-wide crackdown on crypto mining. Despite China’s strict stance on cryptocurrencies, the country is not lagging in the adoption of the novel technology. China is one of the most technologically advanced countries because of its methodical ways of dealing with new concepts and technologies. China launched its digital yuan in 2019 which is aimed at making digital retail payments easier and more convenient. Pakistan’s informal economy is expected to be half the size of its formal economy. Adding up a technology like cryptocurrencies to the mix can further worsen the informality in the country. While Pakistan and China are no match for comparisons, the country can still learn plenty from the policies adopted by China by catering them to local needs. A stricter stance on cryptocurrencies may bode well for Pakistan with speeding up the plans of a central bank digital currency (CBDC).