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THOUGH Pakistan’s official position on cryptocurrencies has evolved considerably over the years, there still seems to be more talk than action on embracing digital assets. On Monday, while speaking at the Pakistan Banking Summit 2025, Finance Minister Muhammad Aurangzeb urged the authorities to approach modern technologies with ‘an open mind’, pointing out that, “The reality is that crypto is already in vogue here in the informal market and the numbers are what they are, even if they are one-fourth of what the numbers are being moved around.” He also seemed regretful that Pakistan had not made a move yet, musing that, “We need to think through and be ahead of the cycle in terms of the regulatory regime and think on how to move forward with AI and digital assets”. While it is difficult to see how Pakistan can move ‘ahead of the cycle’ given that its efforts to regulate crypto have so far not gone anywhere, it may not be too late for it to catch up with the rest of the world.
The Virtual Assets Bill, 2025, which landed in the Senate last month, envisions “a legal and regulatory framework for the issuance, use, trading, and management of virtual assets within Pakistan, ensuring that such assets are backed by the Pakistani rupee”, according to news reports. It proposes the establishment of ‘Virtual Asset Zones’ for the trading and management of cryptocurrencies, which would maintain strict compliance with AML/CFT regulations, operate transparently and be open to regular audits. It also proposes the creation of a regulatory commission to oversee these ‘zones’ and related service providers’ compliance-related issues, as well as the issuance and maintenance of rupee-based virtual assets. All in all, it is a fairly comprehensive bill. However, the bigger challenge may be Pakistan’s poor image vis-à-vis digital rights and regulations. Early cryptocurrencies evolved as an expression of individual freedoms, especially with respect to personal wealth, and in rejection of the various controls exercised by the global financial system. The authorities should admit and embrace this fact. They should aim for a regulatory framework that encourages innovation and protects personal freedoms while exercising oversight. Care must also be taken that pushing cryptocurrencies does not exacerbate the problems unique to Pakistan, such as foreign exchange instability, inflation and capital flight.
Published in Dawn, February 26th, 2025
