Pakistan Moves Cautiously Toward Legalizing Cryptocurrency Amid Global Challenges

Despite having no legal status yet, cryptocurrency in Pakistan is inching toward regulation, as indicated by the government’s establishment of the Pakistan Crypto Council (PCC) earlier this year. However, since its formation, progress has slowed, raising questions about the future of crypto legalization in the country.

Muhammad Zafar Paracha, General Secretary of the Exchange Companies Association and an advisor to the crypto advisory board, stated that while initial work was swift, global economic challenges have caused delays. He added that although the Council continues to function, he does not foresee cryptocurrencies gaining legal status in Pakistan anytime soon. Developing a full regulatory framework could take approximately another year, Paracha estimated.

He explained that the rapid changes in global financial dynamics—rising gold prices, trade issues, and tariff wars—demand careful consideration before legalizing cryptocurrency, given its volatile nature and security concerns like account hacks.

Paracha noted that although international pressure, particularly comments from figures like Donald Trump, initially accelerated discussions around crypto, broader economic uncertainties have tempered the pace.

He warned that while legalizing cryptocurrency could align Pakistan with global trends, it also carries risks, especially for a developing economy. Since cryptocurrencies are primarily purchased in dollars, a lack of strict regulations could lead to significant foreign exchange outflows, which could harm Pakistan’s already fragile reserves.

At the same time, Paracha stressed the necessity of regulation to curb illegal activities, such as arms purchases, human trafficking, and money laundering, which are often associated with unregulated crypto transactions. Legalizing and regulating the sector could bring more transparency and reduce crime.

**What is the Pakistan Crypto Council?**

The Pakistan Crypto Council (PCC) was established by the government to create a stable and progressive framework for blockchain and cryptocurrency integration and regulation. Comprising key policymakers, regulatory heads, and industry experts, the Council aims to build a modern, secure digital asset ecosystem in Pakistan.

**Why was the Crypto Council needed?**

According to Bilal Bin Saqib, CEO of the Pakistan Crypto Council, the country’s digital asset market, which already involves over one million Pakistanis, is growing rapidly. Establishing the PCC was essential to manage this expanding sector responsibly.

**Potential Benefits for Pakistan**

Bilal Bin Saqib stated that a robust regulatory framework could attract foreign investment. Citing an example, he noted that the UAE attracted $30 billion in crypto investments between July 2023 and June 2024. Legalizing crypto in Pakistan could similarly boost revenue and strengthen foreign exchange reserves.

Moreover, it would create job opportunities for the youth by encouraging the establishment of new companies in a legalized environment.

**Current Size of the Crypto Sector in Pakistan**

The crypto sector in Pakistan remains largely informal. An estimated 20 million Pakistanis are involved in cryptocurrency trading, and transactions worth $20 billion were recorded during the financial year 2020-21 alone.