Pakistan’s central financial institution on Friday revoked the in-principle and pilot operations approval of Tag to function as an digital cash establishment in a transfer that poses existential menace to the agency.
State Financial institution of Pakistan mentioned in an order that it’s revoking Tag’s approval to function as an digital cash establishment, the permission that’s required for entities to supply modern, user-friendly and value efficient low-value digital funds devices resembling wallets, playing cards and contactless funds. The central financial institution has additionally ordered the startup to shut all prospects’ pockets accounts and pull its apps from the app shops with quick impact.
The central financial institution’s motion is in response to Tag violating regulatory necessities and “different issues” that emerged in the course of the pilot operations of the agency, it mentioned. The choice has been taken to “shield the curiosity of the general public at massive,” it added.
The regulatory motion follows a months-long probe into Tag, which gives banking and monetary providers resembling contactless fee, playing cards and wallets to customers in Pakistan.
The startup has been accused of forging paperwork to the central financial institution, in keeping with an earlier investor letter obtained by TechCrunch. The central financial institution ordered Tag in August to “immediately” refund all funds of customers.
Tag is likely one of the quickest rising startups in Pakistan. It was valued at $100 million in its seed financing round in September final yr. The startup counts Liberty Metropolis Ventures, Canaan Companions, Y Combinator, Addition and Mantis amongst its backers.
The State Financial institution of Pakistan didn’t instantly reply to a request for remark through cellphone and electronic mail.
Friday’s motion is one other blow to the nascent however quick rising startup ecosystem in Pakistan, which clocked report funding final yr. Airlift, as soon as essentially the most worthwhile startup within the South Asian market, shut down in July this year after it didn’t safe recent funding.
Tag’s chief government couldn’t be instantly reached for remark. The startup will discover interesting the State Financial institution’s determination, a supply with direct data of the matter advised TechCrunch.