In the week the country’s Senate advised the scrapping of its highest value banknote, Pakistan’s Bitcoin trading volume has shot up almost 400%.
The Senate resolution, which was adopted even though the Pakistani government opposes it, would see the 5000 rupee note removed “to reduce illicit money flow.”
Cash war copycat
Multiple news agencies report that Pakistan is aiming to counteract illegal activities conducted with cash and that the move could be a copycat of India’s rupee removals in November.
Reuters reports a Senate angle that has fewer high-value notes “would encourage the use of bank accounts and reduce the size of the undocumented economy.”
Ironically, India has previously indicated one of the reasons behind its moves to replace cash in its economy was to curb money forgery originating in Pakistan.
As its replacement notes came into circulation, the Indian press reported them already being recovered from “terrorists” in Kashmir.
According to the Senate, however, Pakistan’s reforms would be in a different style to those over the border. Notes would be decommissioned not within a matter of days, but years.
Pakistani FinTech lies in wait
Nonetheless, the announcement appears to have added fuel to an already expanding Bitcoin exchange market suddenly exploding with new interest. Unlike India, though, the Bitcoin economy of Pakistan still leaves something to be desired in terms of facilities.
Local Bitcoin exchange Urdubit recently took part in a workshop specifically aimed at cracking customer penetration for startups offering digital economy-related technologies.
“Despite the high potential, a majority of Pakistani SMEs are yet to adopt e-commerce or are sub-optimally engaged,” a press release on the event last month stated.
Organizer Ali Sarfraz Hussain added that “although Pakistan is a latecomer to this sector, e-commerce is rising massively and e-commerce players are mushrooming in the country.”
Pakistan is just the latest economy to toy enter the war on cash. India is not alone, Venezuela and Australia have already launched or are considering their own cashreforms.