The Pakistan government is considering the establishment of a National Crypto Council, a move that could significantly alter the country’s financial landscape. Prime Minister Shehbaz Sharif on Wednesday stated that the government was working towards regulating digital currencies, acknowledging their growing importance in the global financial system. Chairing a meeting of the Economic Advisory Council (EAC), the prime minister emphasized that consultations were underway to assess the benefits and risks associated with digital currencies. A source in the Prime Minister’s Office (PMO) noted that Mr. Shehbaz believed the world was increasingly moving towards digital financial transactions. “Therefore, we are carefully reviewing the pros and cons before taking any regulatory steps,” the source said.
Minister for Finance and Revenue, Senator Muhammad Aurangzeb, has also highlighted the need for a structured and well-regulated digital asset framework, aligning Pakistan with global best practices and ensuring compliance with Financial Action Task Force (FATF) guidelines. This initiative comes as nations worldwide explore the integration of digital assets into their financial ecosystems, aiming to harness the benefits of blockchain technology while mitigating associated risks.
The formation of a National Crypto Council could provide Pakistan with an opportunity to modernize its financial sector and attract international investment. A well-structured regulatory framework would enable the country to facilitate cryptocurrency transactions securely, fostering innovation in fintech and digital payments. By implementing strict oversight measures, the government could reduce the risks associated with money laundering and financial fraud, concerns often raised by global regulatory bodies such as the FATF.
Pakistan’s crypto landscape has remained largely unregulated, leading to a fragmented ecosystem where investors and businesses operate in uncertainty. Without clear legal guidelines, cryptocurrency exchanges and blockchain startups have struggled to gain traction, often facing restrictions from financial institutions. The creation of a National Crypto Council could provide much-needed clarity, establishing legal frameworks that encourage responsible growth while preventing illicit financial activities. If successfully executed, Pakistan could position itself alongside countries that have successfully integrated cryptocurrencies into their financial systems, such as Singapore, Switzerland, and the United Arab Emirates.
Despite the potential benefits, there are several obstacles that the government must address before the council becomes a reality. One of the primary concerns is the regulatory ambiguity surrounding digital assets. While Pakistan has taken steps to address FATF concerns in the past, cryptocurrency remains a grey area in financial regulations. The government must ensure that the National Crypto Council aligns with international anti-money laundering (AML) and counter-terrorism financing (CTF) standards to avoid potential sanctions and maintain global trade relations.
Another challenge lies in the technological and financial literacy gap among regulators, policymakers, and the general public. Cryptocurrencies and blockchain technology are relatively new concepts in Pakistan, and widespread misconceptions persist regarding their use and legitimacy. A lack of understanding among decision-makers could slow down the implementation of effective regulations, potentially leading to overly restrictive policies that stifle innovation. To mitigate this risk, Pakistan must invest in capacity-building initiatives, educating policymakers, financial institutions, and the public about the benefits and risks associated with digital assets.
The integration of cryptocurrency into Pakistan’s financial system will also require collaboration between government bodies, financial institutions, and private sector stakeholders. Traditional banks have been reluctant to engage with cryptocurrency businesses due to concerns over regulatory scrutiny and security risks. The National Crypto Council must bridge this gap by fostering dialogue between regulators and industry leaders, ensuring that policies promote financial inclusion while maintaining security and transparency.
One of the key advantages of a regulated crypto market is the potential for increased foreign investment. A well-defined digital asset framework could attract blockchain startups, fintech companies, and global cryptocurrency exchanges looking to expand into emerging markets. Pakistan’s large, tech-savvy youth population presents a unique opportunity for innovation in financial technology. By creating a favorable regulatory environment, the country could become a hub for blockchain development and digital asset trading in South Asia.
Additionally, the formal recognition of cryptocurrencies could facilitate cross-border transactions, reducing dependence on traditional banking channels and enhancing remittance flows. Pakistan relies heavily on remittances from its diaspora, and digital assets offer a faster, cheaper alternative to conventional money transfer services. By integrating blockchain technology into its financial infrastructure, Pakistan could streamline remittance processes, benefiting millions of citizens who rely on funds sent from abroad.
However, concerns regarding financial stability and monetary policy control must also be considered. Central banks worldwide have expressed caution about the impact of cryptocurrencies on traditional financial systems. If not properly regulated, the widespread adoption of digital assets could undermine monetary policies, leading to capital flight and financial volatility. The National Crypto Council must work closely with the State Bank of Pakistan to ensure that cryptocurrency regulations complement existing financial policies rather than disrupt them.
The road to establishing a fully functional National Crypto Council will require a phased approach, beginning with pilot programs and regulatory sandboxes. Countries like the UK and the UAE have successfully implemented such initiatives, allowing regulators to test policies in controlled environments before widespread implementation. Pakistan could adopt a similar strategy, gradually introducing digital asset regulations while assessing their impact on the financial system.
The global financial community will be closely monitoring Pakistan’s approach to cryptocurrency regulation. A transparent, forward-thinking policy could enhance the country’s reputation as a progressive financial hub, while missteps could result in increased scrutiny from international regulators. The government must strike a balance between innovation and security, ensuring that its digital asset framework supports economic growth while safeguarding financial stability.
Ultimately, the establishment of a National Crypto Council presents a transformative opportunity for Pakistan’s financial sector. By embracing blockchain technology and digital assets, the country can position itself as a competitive player in the global financial landscape. However, success will depend on the government’s ability to navigate regulatory challenges, foster collaboration among stakeholders, and implement policies that promote financial inclusion and economic growth. If executed effectively, Pakistan’s digital asset strategy could pave the way for a more dynamic and resilient financial system, aligning the country with international standards and enhancing its position in the mainstream financial world.
The views expressed in this article are the author’s own and do not necessarily reflect Coverpage’s editorial stance.
