Pakistan Considers Establishing Cryptocurrency Council to Regulate Digital Currency Market

The Government of Pakistan is contemplating the establishment of a Cryptocurrency Council to regulate the growing market of digital currencies. This decision comes as a response to the increasing number of Pakistanis investing in cryptocurrencies illegally, with many experts urging the country to adopt digital currencies like other nations.

Recent reports show that Pakistanis have invested nearly $20 billion in cryptocurrencies, surpassing the country’s foreign exchange reserves. Pakistan is ranked third globally in cryptocurrency adoption, following India and Vietnam. As cryptocurrency awareness grows, the question arises whether Pakistan should embrace this digital trend to keep up with global advancements.

**Potential Impact on Foreign Exchange Reserves**

Some experts, including Zafar Paracha, Secretary-General of the Currency Exchange Association of Pakistan, believe that regulating cryptocurrencies will not harm Pakistan’s foreign exchange reserves. Paracha argues that cryptocurrency transactions, currently occurring outside of Pakistan, will benefit the country’s economy once regulated.

However, experts like Haroon Baig and Raja Kamran warn that without proper regulation, the flow of digital currency could lead to a drain on foreign exchange reserves. As cryptocurrency transactions are primarily conducted in dollars, an uncontrolled market could result in a significant outflow of dollars from the country.

**Call for Legalization and Regulation**

Legalizing cryptocurrencies would also address various illegal activities such as money laundering and arms trafficking, which are prevalent in the unregulated sector. By establishing clear laws and regulations, the government could ensure a safer market environment.

Moreover, if the government formally adopts cryptocurrencies, it would encourage cryptocurrency exchanges to open offices in Pakistan, improving taxation and investment opportunities. However, this would require the government to take swift action to regulate the market effectively.

**Conclusion**

The future of cryptocurrency in Pakistan hinges on effective regulation. While some experts see potential economic benefits, others caution that without strict oversight, the country’s foreign exchange reserves may face challenges. The government’s next steps will determine whether Pakistan can leverage digital currencies for economic growth or fall behind in the global digital economy.