Cryptocurrency's future in Pakistan
The PPC's announcement to allocate 2,000 megawatts of energy to crypto mining and formation of the Pakistan Digital Assets Authority are bold steps, but the licencing frameworks are yet to be developed. Although the reported appointment of World Liberty Financial as a key advisory firm has added international optics, domestic procedural clarity is still not available.
Despite the passage of four months since the PPC's inception no 'white papers', consultation drafts, or public engagement forums to solicit expert feedback or industry alignment are in the offing. Absence of such foundational discourse tends to create regulatory ambiguity and a vacuum of informed public policy. The industry is operating in an atmosphere of speculation where neither the legal model nor its operational dynamics are known and this opacity frustrates stakeholders, impedes innovation, and delays essential compliance-building measures.
Announcement by Bilal Saqib'at the Bitcoin 2025 Conference in Las Vegas declaring Pakistan's intention to establish a government-led Bitcoin Strategic Reserve was a dramatic disclosure and sudden escalation. Reference to the United States as an inspirational model also added geopolitical colour, but the declaration raised significant alarm.
The notion of building strategic reserves in a highly volatile asset like Bitcoin without defined risk controls, legal backing, or multilateral support, especially under an active programme of the International Monetary Fund (IMF) creates a scenario fraught with institutional, constitutional, and international tensions. The IMF does not recognize cryptocurrency as reserve assets or legal tender, complicating any alignment with sovereign commitments.
The existing legal framework, including the Constitution of Pakistan, the State Bank of Pakistan Act, 1956 and the Pakistan Currency Act, 1950, prohibits any parallel currency system or strategic reserves outside officially sanctioned instruments. Concerns intensify when factoring in risks such as foreign exchange reserve mismanagement, cyber security threats, lack of transparency, limited liquidity utilization, reputational exposure, and fragile policy credibility.
The subsequent clarification by the CEO of PCC during a televised interview has further complicated the matter. His assertion that Pakistan would build its Bitcoin reserves using seized crypto assets rather than public funds revealed a glaring misunderstanding of international asset forfeiture law. In jurisdictions such as the United States, ownership of seized crypto remains with the accused until judicial forfeiture is finalized.
The legal transfer process mandates court orders, after which assets are either returned to victims, retained by agencies, or liquidated into fiat and deposited into the treasury. The US government does not hold seized cryptocurrencies in reserve but auctions them post-forfeiture. The exposure of CEO of PCC, lacking comprehension and accurately communicating these mechanisms, reflects poorly on regulatory preparedness of the country. It has also eroded already fragile credibility of Pakistan on the global stage.
Despite its economic fragility, Pakistan remains among the top ten crypto-friendly nations. The projected number of cryptocurrency users in Pakistan is expected to reach 28.9 million by 2026, with projected revenues of $2.4 billion in 2025. Legalization of crypto in such a volatile economic environment poses existential risks to monetary sovereignty and financial sector stability.
The unregulated adoption of crypto could erode confidence in the rupee, weaken the ability of State Bank of Pakistan (SBP) to manage inflation, and incentivize capital flight. The risk of financial disintermediation grows as users shift to decentralized financial systems, bypassing the regulated banking infrastructure. The situation poses a dual risk of systemic instability and heightened scrutiny from global regulatory bodies, particularly Financial Action Task Force (FATF) and the IMF. A more appropriate strategy under these conditions is to recognize crypto strictly as a digital asset class, not as legal tender. The asset treatment model preserves SBP's independence while allowing innovation under strict regulatory conditions.
The formation of a regulated ecosystem of licensed Virtual Asset Service Providers must be the cornerstone of Pakistan's digital asset strategy. Exchanges, wallets, and custodians should operate within a tightly regulated framework governed by Security & Exchange Commission of Pakistan (SECP) and SBP with mandatory know-your-client (KYC), anti-money laundering (AML) protocols, transaction reporting, and audit mechanisms.
The development of a regulatory sandbox environment would enable controlled experimentation under the supervision of regulatory bodies. This approach will support technical learning, policy formulation, and risk detection without national exposure. The cross-border use of crypto must be initially restricted to prevent capital outflows and preserve foreign exchange stability.
The government must distance itself from any notion of sovereign crypto reserves and instead focus on integrating blockchain into public services, such as tokenized bonds, digital land registries, welfare programmes, and logistics tracking. The need for dedicated digital asset legislation is critical at this point of time. The legal framework should classify various token types, outline custodial responsibilities, define consumer protection mechanisms, and ensure compliance with global financial regulations.
Regulatory capacity must be developed in tandem. Training programmes must be established for regulators, law enforcement, forensic auditors, and judicial officials to develop the institutional fluency required for effective oversight.
The international investment narrative around Pakistan's digital future must be repositioned. Pakistan should host a 'Crypto Summit' in Islamabad, followed by regional events in Lahore and Karachi. These summits should not pose as PR campaigns but as policy-shaping forums, connecting global blockchain firms with Pakistani fintechs, banks, academic institutions, and startups. These platforms must also educate and guide the next generation of developers, regulators, and entrepreneurs. The goal must be the formation of a trust-based public-private ecosystem capable of managing, scaling, and governing digital asset innovation securely and sustainably.
The broader institutional ecosystem must be evaluated for performance and reform. The PCC, despite bold announcements, lacks transparency. It has also failed to launch consultative processes, technical papers, or stakeholder engagements. Its work remains confined to speeches and symbolic declarations without measurable progress or inclusion.
The passive role of the Special Investment Facilitation Council (SIFC) must also be addressed. The SIFC must assume leadership in developing Pakistan's crypto economy, beginning with the orchestration of global summits enabling the regulatory apparatus to scale in line with international best practices.
The strategic vision should prioritize safe integration, regulatory maturity, and private sector participation. The global digital economy presents Pakistan with a unique opportunity to redefine itself as a competitive, secure, and innovation-driven hub.
In Pakistan, the future of crypto is bright, anchored in its youthful demographic, entrepreneurial appetite, and capacity to leapfrog institutional bottlenecks through decentralized infrastructure. The right legal architecture, international cooperation, and governance transparency can turn this potential into a powerful national asset.
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
4 hours ago
- Express Tribune
PSX ends flat below 146.5k on profit-taking
The Pakistan Stock Exchange (PSX) closed marginally lower on Friday as profit-taking in the latter half of the session erased early gains amid concerns over mounting losses of state-owned enterprises (SOEs), the International Monetary Fund's (IMF) next review for loan tranche and the falling global crude oil prices. The KSE-100 index, after touching intra-day high of 147,534, retreated to settle slightly below 146,500, down 38 points. Engro Fertilisers, Lucky Cement and Engro Holdings supported the index while Oil and Gas Development Company (OGDC), UBL and Pakistan Petroleum Limited (PPL) weighed on sentiment. "Stocks closed flat amid concerns over SOE losses and next IMF review for the release of third tranche," noted Ahsan Mehanti, MD of Arif Habib Corp. Worries about the unmet IMF conditions for provincial tax collection and falling global crude oil prices fueled the negative close at the PSX, he said. At the end of trading, the benchmark KSE-100 index posted a decline of 37.67 points, or 0.03%, and settled at 146,491.63. Arif Habib Limited (AHL), in its market review, noted that the KSE-100 closed the week flat on Friday, capping gains at 0.7% week-on-week. Some 49 stocks advanced and another 49 declined, where Engro Fertilisers (+3.25%), Lucky Cement (+2.31%) and Engro Holdings (+1.63%) were the top contributors to index gains. On the flip side, OGDC (-2.57%), UBL (-1.34%), and PPL (-2.13%) dragged the index lower, it said. AHL mentioned that the Economic Coordination Committee had approved the setting up of an industrial estate on 4,800 acres of unused Pakistan Steel Mills' land. For the coming week, the resistance for the index is seen near 148,000 with support around 145,000, it added. Topline Securities, in its report, commented that the KSE-100 opened on a positive note and rose to intra-day high of 1,005 points. However, during the latter hours, profit-taking was observed as jittery investors booked profits before the weekend. The top positive contribution to the index came from Engro Fertilisers, Lucky Cement, Engro Holdings, Meezan Bank and Airlink Communication as they contributed 512 points. On the other hand, OGDC, UBL, PPL, Hub Power and Mari Petroleum lost ground, pulling the index down by 499 points, it said. Traded value-wise, Airlink (Rs3.38 billion), OGDC (Rs2.32 billion), PSO (Rs1.53 billion), Lucky Cement (Rs1.30 billion) and NBP (Rs1.11 billion) dominated the trading activity, Topline added. Muhammad Hasan Ather of JS Global said that the KSE-100 closed 38 points down after trading within a tight range throughout the session. Activity remained range bound, driven by upbeat corporate earnings, and investor sentiment was underpinned by optimism about Pakistan's improving macroeconomic indicators and recent credit rating upgrades, he said. Despite intra-day volatility, the market held firm, reflecting growing confidence in fiscal reforms and economic recovery. Going forward, investor focus will remain on earnings season, policy continuity and external inflows, with expectations of a gradual upward trend in equities amid improving fundamentals, the analyst added. Overall trading volumes were recorded at 473.6 million shares, compared with the previous tally of 647.1 million. The value of shares traded was Rs32.9 billion. Shares of 479 companies were traded. Of these, 226 stocks closed higher, 219 fell and 34 remained unchanged. Aisha Steel Mills was the volume leader with trading in 30 million shares, gaining Rs0.55 to close at Rs13.47. It was followed by Media Times with 21.7 million shares, gaining Rs0.39 to close at Rs3.62 and Airlink Communication with 19.9 million shares, gaining Rs9.76 to close at Rs168.04. Foreign investors sold shares worth Rs154 million, the National Clearing Company reported.
Business Recorder
6 hours ago
- Business Recorder
Bilateral trade, investment: Pakistan, US vow to boost cooperation
ISLAMABAD: Pakistan and the United States have reaffirmed their commitment to strengthening bilateral trade and investment, following a high-level meeting between Finance Minister Senator Muhammad Aurangzeb and Natalie Baker, Chargé d'Affaires of the US Embassy here. During the meeting held at the Finance Division, both sides discussed avenues for expanding economic cooperation, finalising a landmark trade agreement, and unlocking new opportunities across key sectors including energy, minerals, IT, and cryptocurrency. The finance minister stated that Pakistan's economy had 'turned a corner,' noting that the recent upgrade by Moody's — aligning all three major international rating agencies in their assessment of Pakistan's economic performance—was clear evidence that the hard and necessary reforms undertaken by the government were yielding positive results. He highlighted Pakistan's bold and much-needed tariff reforms aimed at liberalising trade and steering the country towards export-led growth. Aurangzeb thanked the US for its continued economic and development support to Pakistan and recalled his recent visit to Washington, DC, where he had constructive engagements with US Secretary of Commerce Howard Lutnick and United States Trade Representative Ambassador Jamieson Greer to finalise the trade agreement between both the countries. The minister emphasised that the agreement would usher in a new era of economic collaboration —particularly in energy, mines and minerals, IT, cryptocurrency, and other sectors — while expanding market access, attracting investment, and fostering cooperation in areas of mutual interest. He expressed hope that the deal would lead to increased US investment in Pakistan's infrastructure, development projects, and digital and mining sectors, which were ready for tangible action and progress. Natalie Baker said that the trade agreement presented a significant opportunity for both Pakistan and the US to expand bilateral trade. She noted that US companies were taking a keen interest in investment and entrepreneurial opportunities in Pakistan, particularly in supply chain, production, project management, energy, critical minerals, mining, and oil exploration. Both sides reaffirmed their commitment to working closely together to advance these initiatives, ensuring mutually beneficial outcomes and further strengthening trade and economic cooperation between the two countries. Copyright Business Recorder, 2025
Business Recorder
6 hours ago
- Business Recorder
PSX ends flat
KARACHI: The Pakistan Stock Exchange (PSX) closed almost unchanged on Friday, as a lack of fresh triggers and persistent macroeconomic concerns kept investors sidelined. The benchmark KSE-100 Index ended the day at 146,491.63 points, down 37.67 points or 0.03 percent from the previous close of 146,529.31. The index fluctuated between an intraday high of 147,534.41 points and a low of 146,269.59 points, eventually settling marginally lower. BRIndex100 closed at 14,962.21 points, down 31.99 points or 0.21 percent, with total turnover of 364.59 million shares. BRIndex30 shed 312.23 points, or 0.74 percent, to close at 42,078.55 points, on a total volume of 147.17 million shares. Profit-taking in oil and energy stocks offset selective buying in banking and technology counters. 'Stocks closed flat amid concerns for SOEs' losses and the IMF's next review for release of the third tranche under the EFF. Concerns for unmet IMF conditions for provincial tax collection, and falling global crude oil prices played a catalyst role in the negative close at PSX,' commented Ahsan Mehanti, Director at Arif Habib Corporation. Market capitalization slipped slightly to Rs 17.469 trillion, compared to Rs 17.491 trillion on Wednesday. Overall trading volumes also moderated, with the ready market turnover at 473.6 million shares against 647.09 million shares in the previous session. The traded value of shares fell to Rs 32.88 billion from Rs 40.89 billion in the prior session. Aisha Steel Mills led the volume chart with over 30 million shares, closing marginally higher at Rs 13.47. Media Times Ltd followed with 21.7 million shares, ending the day at Rs 3.62. Air Link Communication ranked third, closing at Rs 168.04 with 19.88 million shares traded. Hoechst Pakistan Limited and Unilever Pakistan Foods Limited were the top gainers of the day, with share prices increasing by Rs 280.91 and Rs 41.00 to close at Rs 3,506.71 and Rs 32,000.00, respectively. On the flip side, PIA Holding Company LimitedB suffered the steepest decline, losing Rs 856.90 to close at Rs 27,814.97, while Nestle Pakistan Limited fell by Rs 103.97 to Rs 8,654.09. Out of 479 active scrips, 219 closed in the red, 226 ended higher, and 34 remained unchanged, indicating a cautious and range-bound trading environment. The BR Automobile Assembler Index finished at 23,880.46 points, gaining 216.46 points or 0.91 percent, with 6.21 million shares traded. The BR Cement Index advanced to 11,692.16 points, up 85.86 points or 0.74 percent, on a turnover of 25.44 million shares. In contrast, the BR Commercial Banks Index slipped 65.44 points, or 0.15 percent, to close at 43,619.93, on 40.28 million shares. The BR Power Generation and Distribution Index fell sharply by 240.95 points, or 1.06 percent, to settle at 22,405.13, with 16.77 million shares traded. The BR Oil and Gas Index also came under pressure, losing 189.78 points, or 1.45 percent, to close at 12,871.27, with a turnover of 24.58 million shares. Meanwhile, the BR Technology & Communication Index inched up by 8.25 points, or 0.25 percent, closing at 3,340.99, on an active volume of 90.80 million shares. According to JS Global's Muhammad Hasan Athar, the index traded within a tight range throughout the session, with activity remaining largely range-bound on the back of upbeat corporate earnings. He noted that investor sentiment was supported by optimism over Pakistan's improving macroeconomic indicators and recent credit rating upgrades. Despite intraday volatility, he said, the market held firm, reflecting growing confidence in fiscal reforms and the broader economic recovery. Copyright Business Recorder, 2025
