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Is Pakistan heading from rupee crash to blockchain blunder? Minister visits El Salvador for crypto push
With a faltering economy, rising inflation, geopolitical instability and a foreign exchange crisis, Pakistan is turning increasingly toward cryptocurrency and blockchain technology as a potential economic life raft. The country's recent high-profile engagements—particularly with El Salvador and the Donald Trump-backed World Liberty Financial (WLF)—signal a radical policy shift that many see as a desperate embrace of digital assets to stave off economic collapse.
But does this emerging crypto love offer salvation, or is it a risky gamble by a nation with limited options?
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A deep economic crisis
Pakistan's economy is in dire straits. As of April 2025, the country held just $10 billion in foreign exchange reserves—barely enough to cover three months of imports., a News18 report said. With over $131 billion in external debt and ongoing tensions with India, including military engagements and the suspension of the Indus Waters Treaty, Pakistan faces severe risks to agricultural productivity and macroeconomic stability.
The International Monetary Fund (IMF) has been keeping the country afloat with a $7 billion bailout package. However, experts warn that even this lifeline could snap if geopolitical risks escalate. The fragility of Pakistan's economy is an open secret, with a piece in the Financial Times warning that it could collapse anytime despite the lifeline from the IMF.
In this economic climate, traditional tools have limited utility. Inflation peaked at 38 per cent in 2023, while the rupee has lost 165 per cent of its value since 2017, a study conducted by the Asian Development Bank said. For a population whose savings are rapidly being eroded, the appeal of decentralised financial systems has grown dramatically.
Rising crypto adoption despite official bans
Despite an official ban on cryptocurrency trading, Pakistan ranks 8th globally in crypto adoption. Citizens are said to hold between $20–25 billion in digital assets, driven by desperation for financial security in a rapidly depreciating fiat system, Geo News reported.
Crypto assets have effectively become a parallel financial system for many Pakistanis. In April 2023, the government doubled down on its prohibition, citing capital flight risks. Nevertheless, crypto continues to thrive in grey markets as Pakistanis turn to Bitcoin and stablecoins to preserve wealth and transact across borders.
This popular adoption is happening against the will of regulators but reflects a grassroots shift toward decentralised finance. For many, crypto is no longer speculative; it is essential.
Governmental shifts from opposition to adoption
After years of resistance, the Pakistani government is formalising its stance on digital assets. The establishment of the Pakistan Virtual Assets Regulatory Authority and plans to launch a Central Bank Digital Currency by this year mark a significant policy reversal.
Further legitimising this shift is the Pakistan Crypto Council, led by Bilal Bin Saqib, who recently signed Letters of Intent with both El Salvador and World Liberty Financial.
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The El Salvador partnership is particularly symbolic. El Salvador was the first nation to adopt Bitcoin as legal tender. With its Bitcoin reserves now valued at over $760 million—nearly triple their original investment—Pakistan sees a model of financial sovereignty and growth through crypto.
Saqib described the partnership as a 'strategic relationship rooted in innovation, inclusion, and shared learning,' adding that El Salvador's 'bold Bitcoin experiment has inspired governments around the world.'
But here is the catch
El Salvador's experiment with Bitcoin as legal tender has failed. The country has reversing its decision to make Bitcoin a mandatory form of payment. While the initiative aimed to revolutionise the financial system and boost the economy, it faced significant challenges.
Bitcoin adoption rates remained low, concerned over volatility reigned supreme, and technical issues with the Chivo wallet could never really be fixed.
The question is this: Is Pakistan really looking up to the right example to emulate cryptocurrency in the country?
There is Trump-backed WLF deal too
More controversial is the deal with WLF, a DeFi platform backed by US President Donald Trump's family. According to the Pakistani Ministry of Finance, WLF has committed to accelerating blockchain innovation and stablecoin adoption in Pakistan.
High-level meetings took place between executives of the World Ledger Foundation (WLF) and Pakistan's most influential institutions, including the army chief, prime minister, deputy prime minister and the governor of the State Bank.
These discussions led to an agreement that outlines key areas of cooperation aimed at advancing Pakistan's digital finance ecosystem. Central to the deal is the testing of blockchain-based financial products through regulatory sandboxes, allowing for innovation under controlled conditions.
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The agreement also includes the tokenisation of real-world assets such as real estate, enabling greater liquidity and transparency. Further, it seeks to expand the use of stablecoins for cross-border remittances and trade to reduce costs and improve efficiency.
In addition, the partnership will focus on the development of decentralised finance (DeFi) infrastructure, laying the groundwork for a more inclusive and resilient financial system.
Crypto: A lifeline or a gamble?
The optimism from the government and crypto leaders is palpable, but this rapid embrace of digital currencies is not without serious risks.
Pakistan faces several critical risks as it moves toward deeper integration with cryptocurrency initiatives. The country remains in the early stages of developing a comprehensive legal and regulatory framework, creating a regulatory vacuum that could allow for unchecked growth.
Without strong oversight, the rapid adoption of digital assets might facilitate fraud, capital flight and money laundering. Another major concern is the inherent volatility of cryptocurrencies like Bitcoin. Sudden price crashes could wipe out billions in perceived wealth, potentially triggering widespread financial panic and undermining public trust in emerging financial technologies.
Geopolitically, Pakistan's close alignment with the Trump-backed WLF may carry unintended consequences. A shift in political leadership in Washington could weaken support, while global institutions such as the IMF—already critical of Pakistan's fiscal management—may view the partnership as a destabilising move.
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Additionally, an overreliance on cryptocurrency as a singular economic solution risks sidelining broader, long-term economic reforms. This could detract from critical efforts to strengthen traditional industries, enhance export capacity and build a more resilient and diversified economy.
Yet, despite these risks, Pakistan's limited options are pushing it toward cryptocurrency. As traditional finance mechanisms fail to meet citizens' needs, the decentralised economy offers both hope and hazard.
Is crypto Pakistan's last hope?
At this moment, it appears that Pakistan is not just experimenting with cryptocurrency—it is banking on it. The deals with El Salvador and WLF reflect a government strategy that increasingly sees crypto as a pillar of future financial stability, not a passing trend.
However, this step is born more out of necessity than choice. Soaring inflation, geopolitical pressures and a weak rupee have made crypto a survival tool for citizens and an innovation imperative for the state.
Pakistan's economy is not at the mercy of cryptocurrency—yet. But it is undeniably tethered to it and the government's growing entanglement with blockchain and DeFi may determine whether the country navigates through crisis or plunges deeper into instability.
In a world where digital assets are reshaping global finance, Pakistan may be among the first developing nations to bet its economic future on the blockchain. Whether that bet pays off—or explodes—is a question that only time, policy clarity and global cooperation can answer.
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But if Pakistan must go the crypto way, is El Salvador the model it wants to follow?
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