Pakistan is coming down with a heavy hand on cryptocurrency dealers and has asked the Pakistan Telecommunication Authority (PTA) to shut down 1,600 websites over money laundering issues.

The country's Federal Investigation Agency (FIA) told the PTA that cryptocurrency is a tool of money laundering. Pakistani newspaper The Express Tribune says that arrests of cryptocurrency dealers are expected across the country as the FIA has asked the PTA to identify the people behind the websites.

FIA's cybercrime wing has already launched a joint operation with the PTA against cryptocurrency operators in the country. It began its investigations in December last year after people complained of being cheated by cryptocurrency apps.

In the first week of January 2022, the agency even sent a notice to Binance–the world's largest cryptocurrency exchange, asking the organisation about 11 mobile apps that had defrauded Pakistanis of nearly $100 million in the digital currency fraud.

Each app had thousands of customers with investment ranging between $100 to $80,000.

Imran Riaz, Head of Cyber Crime Zone, of the Karachi-based FIA tweeted: "The Federal Investigation Agency Cyber Crime Sindh’s action on 11 online investment apps integrated with Binance. The apps defrauded Pakistanis with about 100 million $. A letter has been sent to Binance as well as notice to GM Binance Pakistan".

Pakistan had declared the cryptocurrency illegal in 2018. However, that did not prevent Pakistanis from pumping money in digital currencies. The Pakistan Chamber of Commerce and Industry recently said that Pakistanis hold nearly $20 billion in investments in digital currencies, which is slightly less than the country's foreign exchange reserves at approximately $24 billion.

Even as the FIA takes action, in a complete reversal, the government is thinking of regularising cryptocurrency and promoting blockchain technology. 

At a block-chain technology meet, Science and Technology Minister Shibli Faraz told journalists: "The government wants to regularise cryptocurrency and the State Bank, SECP [Securities and Exchange Commission of Pakistan] and Finance Division are working on it. We cannot stay out of the affairs of the region".

The minister said that government’s control was necessary for their protection and transparency. He added that the science and technology ministry had launched blockchain technology pilot projects in collaboration with three universities.