LHC rules P2P cryptocurrency trading alone is not illegal in Pakistan
The Lahore High Court (LHC) has ruled that peer-to-peer (P2P) cryptocurrency trading and receiving related funds in a bank account are not criminal offences by themselves. The court said investigators must provide clear evidence before linking such transactions to fraud or cybercrime.
The decision came in a detailed 15-page judgment issued by Justice Tariq Saleem Sheikh. The court upheld the pre-arrest bail of three people accused by the Federal Investigation Agency (FIA) in a cryptocurrency-related case.
According to the FIA, the accused received money from the complainant through their bank accounts. The complainant claimed he transferred nearly Rs686 million while buying around 270,000 USDT after being encouraged by an acquaintance to invest in cryptocurrency.
The complainant later alleged that his cryptocurrency account was frozen. He accused those involved of causing him financial losses through the investment.
The court said receiving money in a bank account or transferring virtual assets alone is not enough to prove offences such as fraud, forgery or violations under the Prevention of Electronic Crimes Act (PECA). It stated that these actions do not automatically make a person guilty of a criminal offence.
The judgment explained that investigators must prove the accused deceived the investor or created forged electronic records. They must also establish that the accused were directly responsible for freezing the complainant’s crypto account.
Also read: Cryptocurrency declared permissible
The LHC further clarified that cryptocurrencies are not recognised as legal tender in Pakistan. However, the court said this fact alone does not make personal cryptocurrency trading illegal.
The judgment also referred to the State Bank of Pakistan’s 2018 circular. It explained that the circular restricts regulated financial institutions and does not create a criminal offence for private individuals trading cryptocurrencies.
The court also stated that buying or selling USDT does not violate foreign exchange laws unless prosecutors can prove an illegal foreign exchange transaction. It added that each case must be decided on the basis of evidence.
The LHC said there was no evidence showing the accused had misled the complainant or manipulated electronic records. The court also found no proof that they controlled the platform where the complainant’s assets were frozen.
As a result, the court ruled that the physical custody of the accused was not necessary. Their pre-arrest bail was therefore allowed to continue.
The ruling provides important legal clarity for people involved in personal cryptocurrency trading in Pakistan. However, it does not legalise cryptocurrency as official currency and confirms that fraud cases will still depend on the available evidence.
