4 days ago
- Business
- Business Recorder
Legal gaps in crypto adoption
EDITORIAL: Pakistan's push to embrace cryptocurrency has seen the government take a host of measures over the last few months to promote the adoption of digital assets like Bitcoin.
From the establishment of the Pakistan Crypto Council and appointing entrepreneur Bilal bin Saqib as its CEO with the status of minister of state, to allocating 2,000MW of surplus electricity for Bitcoin mining and the finance minister's declaration that Pakistan wishes to be a leader in this space, all reflect a coordinated effort to position the country at the forefront of the digital economy.
What completely boggles the mind, however, is that amid this enthusiastic drive for crypto adoption, one basic fact has been persistently overlooked: cryptocurrency remains illegal in Pakistan. All transactions involving such assets are prohibited under current regulations, and anyone dealing in these currencies is liable to be investigated by the Financial Monitoring Unit and the FIA.
This was made clear in no uncertain terms by senior officials of the State Bank of Pakistan and the finance ministry during a meeting of the National Assembly's Standing Committee on Finance and Revenue on May 29.
Finance Secretary Imdadullah Bosal's categorical statement that 'crypto is not a legal tender in Pakistan' is something that casts a long shadow over the government's recent actions in this space. It highlights a shocking lack of policy coherence and prompts broader questions about the prudence of promoting crypto initiatives without first putting in place a clear legal framework.
The result is a climate of confusion and uncertainty, leaving investors, regulators and the public unsure of the government's true policy direction and intent behind these contradictory signals.
While some of the government's moves in this space may be seen as attempts to garner influence with the Trump Administration, which includes strong advocates of cryptocurrency, its actions appear to go beyond merely symbolic gestures.
At the recent 2025 Bitcoin Conference held in Las Vegas, for instance, Bilal bin Saqib unveiled Pakistan's first government-led Strategic Bitcoin Reserve, intended to hold digital assets in state custody as a sovereign reserve. This, along with other initiatives, suggests a clear intent to integrate crypto into national economic strategy despite the legal and regulatory contradictions, and the inherent risks of embracing an asset class, which thus far has been known for its volatility, lack of effective oversight mechanisms and susceptibility to speculative bubbles.
The fact of the matter is that cryptocurrency is not considered legal tender in most countries of the world, including in the US. There is still little regulatory clarity to the cryptocurrency space in most jurisdictions, with it long having operated on the fringes of the mainstream global financial system due to its volatile nature, resistance from central banks and limited mainstream adoption by businesses. This is not to say that cryptocurrencies cannot achieve legitimate adoption in a safe and regulated manner that preserves financial stability.
But for that to happen, governments would need to establish clear regulatory frameworks that address consumer protection, financial stability risks and anti-money laundering concerns while fostering innovation.
In Pakistan's case, crypto adoption demands carefully crafted regulations that balance risk — particularly regarding capital flight — with opportunities for financial inclusion and improved remittance flows.
Given our fragile economic position and IMF commitments, we must proceed cautiously by first establishing a clear regulatory framework developed through collaboration between blockchain specialists, technologists and economic managers who understand both our economic challenges and risks of crypto adoption.
The current approach of haphazard adoption without proper legal safeguards creates dangerous uncertainty: it encourages public investment in an illegal asset class, exposing citizens to potential legal consequences, and leaves our economy vulnerable to capital flight and money laundering risks. The government must rethink this blind embrace of crypto and first build legal guardrails before proceeding further.
Copyright Business Recorder, 2025
