New Delhi: Amid a strained economy, Pakistan is going all out with crypto.
In a major policy shift, the State Bank of Pakistan (SBP) on Thursday agreed in principle to legalise digital currencies and signalled the formal legalisation of virtual assets like crypto. It also announced its plans to launch a central bank-backed digital currency (CBDC).
According to reports, in a Senate Finance Committee briefing, SBP Deputy Governor, Inayat Hussain, confirmed that the advisory previously deeming cryptocurrencies illegal will be withdrawn. This will lead to a more regulated framework, allowing legal trading and ownership of digital assets across the country. In May, the SBP and the Ministry of Finance had declared crypto illegal, and it was banned in the country.
Analysts say the SBP’s position has been consistent and pragmatic, and it is “the right decision”.
“Technically, the SBP never declared crypto illegal. That is not their mandate. What SBP said in 2018 was that crypto cannot be used in Pakistan by the financial institutions it regulates until a legal framework exists,” Habibullah Khan, CEO of Penumbra, a digital design studio specialising in Pakistan’s digital economy, told ThePrint.
“The reason for this is that there were no laws to regulate crypto, and Pakistan has international obligations with FATF, etc, on compliance and governance. This was the right decision,” he added.
The deputy governor also disclosed that the central bank is actively working on a legal digital Pakistani rupee, one that will be issued exclusively by SBP and used within a regulated ecosystem for purchasing virtual assets. The Senate committee noted that Pakistanis have invested around $21 billion in cryptocurrencies. This digital rupee will serve as a secure and traceable medium for crypto-related transactions, curbing the grey-market dealings that have so far defined Pakistan’s crypto scene.
“The SBP’s earlier and current positions are consistent, as it is only flagging that legislative and regulatory updates are needed to create a framework for ownership and trading of digital assets,” said Uzair Younus, Principal at The Asia Group, a Washington-based consulting firm, to ThePrint.
He further added that formal legalisation won’t cause a seismic shift in the market.
“Those who want to own and trade these assets are already doing so, but in an informal and technically illegal way. Allowing for this trading to occur formally will increase traceability, transparency, and formalisation of the sector.”
But not everyone is as optimistic. Hussain Nadim, a policy strategist and Pakistani AI expert, highlighted the increasing role of the military in the endeavour.
“Pakistan is under a military dictatorship right now, which essentially means that there is no system, processes, or checks and balances in place anymore. The problem is that when you override the existing structures to force something novel like crypto without due diligence or impact assessments, the result will be chaotic,” he told ThePrint.
Laws and regulations
The upcoming Virtual Asset Bill 2025, now under consideration, aims to regulate digital asset transactions across Pakistan. The bill includes the formation of a Pakistan Virtual Asset Regulatory Authority (PVARA). This body will oversee licensing, monitoring, and the broader regulatory framework for virtual asset providers and exchanges.
Importantly, while virtual assets will be transferable nationwide, they cannot be used to purchase goods, services, or make investments outside the prescribed digital ecosystem. Nor will they be considered legal tender for general transactions. This contained approach aims to balance innovation with risk mitigation.
Board members of the new authority will include high-ranking officials from institutions such as SBP, Securities and Exchange Commisssion of Pakistan, Federal Board of Revenue, Federal Iinvestigation Authority, and the Ministries of Finance, Law, and IT.
The Senate Finance Committee has recommended including parliamentary representation on the board and suggested a minimum of five years of experience for the authority’s chairman, with an age cap of 55 years, though exemptions may apply for second terms.
Additional safeguards include strict data privacy requirements for service providers and conflict-of-interest measures that bar board members from insider trading or information misuse.
Pakistan’s crypto future
Habibullah Khan noted that the SBP’s current stance is merely a continuation of its earlier narrative. “You must remember a year ago, in September 2024, SBP Act amendments were proposed that would define an SBP-issued digital currency, paving the way for a CBDC framework.”
He added that Pakistan is in a unique position to capitalise on crypto innovation. “Pakistan is number 3 in global crypto adoption so far in 2025, behind India and the US, and currently has over 40 million crypto wallets. In many places in Pakistan, excess power exists, which would make crypto mining viable. All Pakistan needs is a legal blueprint.”
He praised the Virtual Assets Ordinance 2025, which came into force on 8 July 2025, for establishing a regulatory and sandbox environment through the creation of PVARA. He also credited Bilal bin Saqib, Pakistan’s Minister of Blockchain & Crypto, for his aggressive push to transform Pakistan into a leader in the crypto landscape of emerging economies.
“Bilal is the reason all of this has been done within just one year! He’s also ensuring that Pakistan will set up a Sovereign Crypto Fund that would invest in Bitcoin and other cryptocurrencies,” Khan added.
Hussain Nadim warned that this could be the start of a major disaster for Pakistan that will take years to undo.
“Pakistan’s crypto move may earn it some good PR, but it could trigger a massive capital flight, helping the ruling elite, and incentivising local investors to park money in a non-productive sector like crypto,” he said, blaming Pakistan’s current military-run, opaque system.
The Trump bailout
With its economy in crisis and heavily reliant on repeated IMF bailouts, Pakistan is looking at a potential lifeline in cryptocurrency, and in a surprising partnership with a company linked to US President Donald Trump’s family.
In February 2025, the Pakistani government established a Crypto Council. In May, that council was elevated into a full-fledged regulatory body named the Pakistan Digital Asset Authority, tasked with overseeing and regulating digital assets, including cryptocurrencies and blockchain technologies.
In April, Pakistan entered into a partnership with World Liberty Financial (WLF), a firm reportedly connected to members of Trump’s family. WLF has pledged support in helping Pakistan develop blockchain infrastructure, tokenise assets, and navigate the broader crypto industry. However, the specifics of the agreement remain unclear.
(Edited by Theres Sudeep)