Pakistan strips YC-backed Tag of fintech services, orders to pull apps • TechCrunch

Pakistan’s central financial institution on Friday revoked the in-theory and pilot functions acceptance of Tag to work as an digital dollars establishment in a go that poses existential risk to the company.

Point out Lender of Pakistan said in an order that it is revoking Tag’s approval to function as an electronic cash establishment, the permission that is demanded for entities to provide innovative, person-helpful and cost productive very low-worth digital payments devices these types of as wallets, cards and contactless payments. The central financial institution has also ordered the startup to near all customers’ wallet accounts and pull its apps from the app outlets with instant result.

The central bank’s action is in reaction to Tag violating regulatory demands and “other concerns” that emerged through the pilot operations of the company, it stated. The final decision has been taken to “protect the curiosity of the community at huge,” it added.

The regulatory action follows a months-very long probe into Tag, which gives banking and economical expert services these as contactless payment, playing cards and wallets to customers in Pakistan.

The startup has been accused of forging files to the central financial institution, according to an previously trader letter received by TechCrunch. The central financial institution requested Tag in August to “immediately” refund all resources of consumers.

Tag is a single of the quickest rising startups in Pakistan. It was valued at $100 million in its seed financing round in September very last calendar year. The startup counts Liberty Town Ventures, Canaan Associates, Y Combinator, Addition and Mantis between its backers.

The State Financial institution of Pakistan did not straight away react to a request for comment by means of mobile phone and electronic mail.

Friday’s action is one more blow to the nascent but rapidly developing startup ecosystem in Pakistan, which clocked document funding last calendar year. Airlift, once the most useful startup in the South Asian industry, shut down in July this yr after it failed to safe clean funding.

Tag’s chief govt could not be right away achieved for comment. The startup will examine appealing the Condition Bank’s determination, a supply with direct awareness of the subject explained to TechCrunch.