Bitcoin Strategic Reserve
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Pakistan's recent announcement of a state-backed Bitcoin Strategic Reserve is the latest in a series of major shifts in global crypto policy and is earning simultaneous praise and consternation. Though the policy change comes on the heels of the US setting up its own strategic crypto reserve — the largest in the world — the US reserve has been populated with only recovered and seized crypto, and the country has been clear that it does not intend to get involved in mining.
Pakistan, on the other hand, must learn from the experiences of El Salvador, which became the first country to fully legalise crypto in 2021 and the first to have a crypto-induced economic crash a year later. Despite Bitcoin having recovered its price since El Salvador has had to scale back crypto purchases and mining to meet the terms of an IMF bailout that was necessitated by the failure of crypto to help improve its teetering economy, which advocates had promised was a sure thing — something that should ring familiar for Pakistanis.
Our Bitcoin czar, Bilal Bin Saqib, recently said assets would "never, ever be sold" as a long-term bet on decentralised finance. While this may help a country benefit from price appreciation in the long run, Pakistan's foreign reserves are often little more than pocket change, leaving little wiggle room to spend on crypto without sacrificing elsewhere. Also, Bilal skipped over the point that Bitcoin is still technically illegal in Pakistan under SBP and SECP rules.
The pivot to crypto is a high-stakes gamble which, if executed transparently, could attract foreign investment and foster financial inclusion. But the current approach feels more like a technocratic fantasy, that could prove to be two steps back for the economy and a great leap forward for corruption.
After all, the Bitcoin advisors include Binance, which does business with the children and companies of President Trump, and World Liberty Financial, which is majority-owned by the Trump family and includes investors who faced fraud charges until the Trump administration dropped the cases against them. Or maybe that is the goal — investors have dropped billions into Trump-owned crypto products. Most of that money will end up in the Trump family's pockets, while the investors have seen benefits ranging from pardons to favourable White House policies.
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