Introduction: A Turning Point for Pakistan’s Crypto Journey
Cryptocurrency has long been a subject of debate in Pakistan, with both excitement and skepticism surrounding it. For years, the State Bank of Pakistan (SBP) maintained a strict stance against crypto trading, declaring it illegal and warning citizens against investing in virtual assets. However, the recent news from Islamabad marks a historic shift. During the Senate Standing Committee on Finance session, SBP Deputy Governor confirmed that the earlier advisory declaring cryptocurrency illegal has officially been withdrawn. This single development has opened the doors for Pakistan to move towards a regulated digital currency ecosystem. With the SBP now preparing to launch its own Central Bank Digital Currency (CBDC) valued at PKR 1, Pakistan is stepping into a new era of financial modernization.
From Ban to Legalization: The Withdrawal of SBP’s Advisory
In 2018, the State Bank of Pakistan declared cryptocurrency transactions illegal. This move was aimed at protecting citizens from scams, fraud, and the risks associated with unregulated assets. For years, this ban created confusion among investors, miners, and technology enthusiasts who saw digital currency as a powerful tool for economic growth. But now, the SBP has withdrawn that advisory, which effectively means that crypto is no longer declared “illegal.”
This reversal is not just symbolic; it demonstrates the government’s willingness to embrace innovation. By removing the advisory, the SBP has laid the foundation for building a legal framework that protects investors, prevents money laundering, and ensures that Pakistan can participate in the global digital economy.
The Announcement of a PKR 1 Digital Currency
One of the most groundbreaking announcements made during the Senate committee meeting was the confirmation of Pakistan’s very own digital currency. According to the SBP, this Central Bank Digital Currency (CBDC) will be issued by the State Bank itself and will have the value of PKR 1.
This decision is revolutionary because it gives Pakistan the opportunity to:
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Modernize its payment system.
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Ensure transparency in digital transactions.
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Provide a stable alternative to volatile cryptocurrencies like Bitcoin.
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Reduce dependency on cash-based transactions and improve tax collection.
The CBDC will not only bring Pakistan in line with global financial trends but also help in tackling issues like illegal trade and unrecorded economic activities.
Opposition to the Digital Currency Holding Limit
During the session, the Senate members discussed the proposed limit for holding digital currency, which was initially suggested at just $00. Members strongly opposed this idea, arguing that such a low limit would discourage investment and innovation. By setting an unrealistically small cap, the purpose of legalization would be defeated.
The committee members emphasized that Pakistan should instead focus on building strong regulatory frameworks that encourage growth while ensuring accountability. By rejecting the strict holding cap, they have shown intent to create a crypto-friendly environment in Pakistan.
Establishment of a Crypto Authority in Pakistan
Another significant proposal was the formation of aCrypto Regulatory Authority. This authority will be responsible for overseeing cryptocurrency transactions, licensing exchanges, and ensuring compliance with anti-money laundering (AML) laws.
Key recommendations for this authority include:
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Members must have at least five years of professional experience.
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More young people should be included to bring innovation and modern ideas.
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The authority should work closely with international regulatory bodies to maintain global standards.
This authority will play a central role in Pakistan’s digital asset ecosystem, ensuring that the mistakes of the past do not repeat themselves.
The $21 Billion Investment Claim
Senator Afnan Ullah made a bold claim during the session, stating that $21 billion worth of investments have already been made in Pakistan’s crypto sector. While this figure may sound surprising, it reflects the strong underground interest and activity in cryptocurrency that has continued despite the ban.
For years, thousands of Pakistanis have been trading crypto through international platforms and peer-to-peer markets. The legalization of crypto will finally bring these investments into the formal economy, allowing the government to generate revenue through taxation and regulation.
Legalization of Crypto Trading in Pakistan
Until now, all cryptocurrency trading in Pakistan was considered illegal. This left millions of users vulnerable to fraud and scams, as they had no legal protection. With the withdrawal of the advisory, the SBP and government are now moving towards making crypto trading legal and regulated.
Legalization means:
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Local exchanges can register and operate officially.
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Investors will have legal rights and protections.
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Tax revenue can be generated from digital asset transactions.
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Pakistan can attract global blockchain companies to invest in its economy.
This transition will require carefully designed laws to prevent misuse while promoting innovation.
Challenges of Cryptocurrency Adoption in Pakistan
While the developments are promising, Pakistan faces several challenges in adopting cryptocurrency at a national scale:
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Expensive Electricity: Crypto mining requires high energy consumption. Pakistan already struggles with electricity shortages, and high costs could become a barrier.
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Regulatory Readiness: Building a new authority and implementing effective laws will take time.
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Public Awareness: Many people still see crypto as a scam or gamble. Public education campaigns will be necessary.
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Security Risks: Cybersecurity threats, hacking, and fraud are real challenges that need to be addressed.
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Banking Integration: Pakistani banks will need to upgrade their systems to handle digital currencies effectively.
Chinese Companies Showing Interest in Pakistan’s Mining Sector
Interestingly, reports indicate that Chinese companies have already approached Pakistan with offers to set up crypto mining operations. These companies have proposed building their own power generation facilities to overcome the issue of expensive electricity.
If approved, this could bring massive foreign investment into Pakistan, create jobs, and position the country as a regional hub for mining and blockchain technology.
Committee Drama and Political Tensions
The Senate session was not without its drama. Senator Afnan Ullah criticized the law secretary, accusing him of “stealing his bill” and taking credit for it. Chairman Salim Mandviwalla also expressed frustration, pointing out that the government only wakes up when private members bring important bills.
This political tension highlights the urgent need for Pakistan to develop a unified strategy for digital assets. Without coordination between different institutions, progress could be slowed.
The Road Ahead: What This Means for Pakistan
The legalization of cryptocurrency and the launch of a PKR 1 digital currency can have far-reaching impacts on Pakistan’s economy:
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Increased Foreign Investment: By providing a legal framework, Pakistan can attract international companies.
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Financial Inclusion: Millions of unbanked citizens can participate in the digital economy.
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Boost to IT Sector: Local developers, startups, and fintech companies will thrive.
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Job Creation: Mining, trading, and blockchain development will open new career opportunities.
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Global Recognition: Pakistan will join the ranks of countries like China, India, and the EU that are experimenting with CBDCs.