Pakistan to Explore Legalization of Cryptocurrency

by Riaz Haq

Mar 28

Islamabad is establishing the Pakistan Crypto Council (PCC) to look into regulating and legalizing the use of cryptocurrencies, according to media reports. Cryptocurrency refers to digital currencies that can be used to make purchases or investments using encryption algorithms. US President Donald Trump's endorsement of cryptocurrencies and creation of a "bitcoin reserve" has boosted investors’ confidence in it.  

The State Bank of Pakistan, the nation's central bank, has not authorized any individuals or organizations to carry out the sale, purchase, exchange, and investment of digital currencies, coins, and tokens. But the country has not officially banned the use of cryptocurrencies either, allowing about 20 million users to engage in crypto transactions. “We are coming on number three and four globally and there are many blockchain technology opportunities in Pakistan", said Bilal Saqib, the chair of the PCC.  

Top Countries Ranked By Global Crypto Adoption Index. Source: Chainalysis

Saqib told Bloomberg that regulatory sandboxes were being developed to create fast-track systems for crypto startups, enabling them to operate within a controlled and compliant environment.

There are media reports that Pakistan is working on lower electricity tariffs to attract crypto mining and blockchain-based data centers, aiming to utilize surplus power at marginal costs while fostering growth in the digital asset industry. Demand for grid electricity has been declining amid a solar power boom in the country. 

Cryptocurrencies are managed in a blockchain, which is a digital ledger that utilizes blocks of data and time stamps to create a digital transaction record.  Similar to a traditional digital spreadsheet, a blockchain contains a log of transactions. However, it uses a distributed structure in which data is stored on multiple machines, and all copies need to match before a transaction is considered valid. Blockchain in finance allows for faster and cheaper transfers and more accurate accounting records. Blockchain technology is seen as the future of fintech (financial technology). It can help streamline tens of billions of dollars worth of remittances from overseas Pakistanis.

Downplaying the fear of the abuse of cryptocurrencies for criminal activity, Saqib told the media: “Globally 0.24 percent cryptocurrency transactions are used for wrong things,” he said. “We want to use this technology for other things like real estate, agriculture and to unlock their liquidity.”

Talking about taxation, Saqib said the government intends to implement a “balanced pro-growth tax structure” to encourage foreign investment in the crypto sector. He believes cryptocurrency can significantly boost Pakistan’s fintech sector, positioning the country as a regional leader in digital finance. 

There is a lot of interest in enabling the use of crypto currencies around the world. It is not just developing nations like Pakistan. There are many countries actively developing regulations for cryptocurrencies, with some groupings like the EU implementing measures to protect users and combat criminal activities, while others, like the US, are slowly approaching regulation through existing market regulators like the SEC and CFTC. The jury is still out on the potential for success of such efforts. 

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  • Riaz Haq

    Pakistan inches closer to entering crypto world

    https://tribune.com.pk/story/2542523/pakistan-inches-closer-to-ente...

    ISLAMABAD:
    Pakistan on Saturday announced that it has initiated a deal with President Donald Trump-backed World Liberty Financial to accelerate the journey towards legally adopting digital currencies, in a move that might follow a slew of legal changes to inch towards the crypto world.

    The Ministry of Finance made the announcement following separate meetings between the World Liberty Financial (WLF) delegation and Chief of Army Staff General Asim Munir, Prime Minister Shehbaz Sharif and Deputy Prime Minister Ishaq Dar. The deputy prime minister is taking keen interest in promotion of crypto currencies.

    "World Liberty Financial, the decentralized finance (DeFi) platform backed by the US President Donald Trump, has signed a landmark Letter of Intent (LoI) with the Pakistan Crypto Council (PCC) to accelerate blockchain innovation, stablecoin adoption, and decentralized finance (DeFi) integration across Pakistan," stated the Ministry of Finance.

    The public announcement about signing the Letter of Intent was made a day after President Donald Trump commented on the recent wave of hostilities between India and Pakistan.

    "I am very close to India and I'm very close to Pakistan…. they'll get it figured out one way or the other. I'm sure… I know both leaders", said Trump.

    The finance ministry stated that the WLF delegation - including Zachary Folkman, Zachary Witkoff (son of Steve Witkoff who's the United States Special Envoy to the Middle East), and Chase Herro - met with Pakistan's leadership including the Prime Minister, Chief of Army Staff, Deputy Prime Minister, Minister of Information and Minister of Defence to formalize cooperation.

    It added that cooperation will mark a major step toward positioning Pakistan as a global leader in the digital finance revolution.

    Early this month, Pakistan also appointed Changpeng Zhao, founder of Binance and one of the most influential figures in Web3, as a Strategic Advisor to the Pakistan Crypto Council. Zhao had also met with Shehbaz Sharif, Ishaq Dar, Finance Minister Muhammad Aurangzeb, and Punjab leadership, in addition to meeting with other key stakeholders.

    Reuters reported last month that the Trump family has a claim on 60% from World Liberty Financial operations once the core business gets going.

    World Liberty disclosed in January that the Trump family had taken control of the business. Two of its co-founders, crypto entrepreneurs Zak Folkman and Chase Herro, were replaced as the controlling parties of World Liberty by an entity in which the Trump family holds a 60% stake, according to Reuters.

    The WLF goal is to allow people to access financial services using crypto currencies and without intermediaries like banks in what is called decentralized finance, or DeFi. World Liberty Financial last month raised $550 million selling so-called governance tokens. Most of those sales took place after Trump's election win in November, Reuters calculations show.

    The finance ministry said that Pakistan's proactive approach demonstrates its commitment to embracing the next wave of financial innovation.

    "The government has signaled plans to very soon announce comprehensive crypto legalization policies, further strengthening Pakistan's position as one of the fastest-growing crypto markets in the world", according to the Finance Ministry.

    Apr 26

  • Riaz Haq

    From Google AI search for "Can the entire financial system move to blockchain?"

    While a complete transition of the entire financial system to blockchain is unlikely in its current form, blockchain technology is poised to significantly reshape the industry. The financial sector is already adopting blockchain for various applications, and experts predict it will play a major role in the future of finance.
    Here's a more detailed look:
    Reasons for a Shift Towards Blockchain:
    Increased Efficiency and Speed:
    Blockchain offers faster and more secure transactions compared to traditional systems, which can reduce settlement times and costs.
    Reduced Costs:
    By eliminating intermediaries and streamlining processes, blockchain can significantly lower transaction costs.
    Enhanced Transparency and Security:
    The decentralized nature of blockchain provides a transparent and secure record of transactions, which can help combat fraud and improve trust.
    New Financial Products and Services:
    Blockchain enables the development of new financial products and services, such as digital assets, tokenized securities, and smart contracts.
    Improved Accessibility:
    Blockchain can facilitate more inclusive financial services by making them more accessible to individuals who may not have access to traditional banking services.
    Challenges to Full Adoption:
    Regulatory Uncertainty:
    .
    The lack of clear and consistent regulations across different jurisdictions can create uncertainty and hinder the adoption of blockchain.
    Scalability Issues:
    .
    Some blockchain networks struggle with scalability, which can limit their ability to handle high transaction volumes.
    Interoperability:
    .
    Different blockchain networks may not be able to easily interact with each other, which can hinder the development of a fully integrated financial system.
    Security Concerns:
    .
    While blockchains themselves are secure, there are still security concerns associated with the broader financial system, such as the need to protect user data and prevent unauthorized access.
    Integration with Existing Systems:
    .
    Integrating blockchain with existing financial systems can be complex and require significant investment.
    The Future of Blockchain in Finance:
    Hybrid Approaches:
    Many financial institutions are likely to adopt a hybrid approach, combining the benefits of blockchain with the expertise of traditional banking systems.
    Specialized Use Cases:
    Blockchain is likely to be used for specific applications within the financial sector, such as cross-border payments, trade finance, and security tokenization.
    Continued Innovation:
    As blockchain technology matures and regulatory frameworks develop, we can expect to see further innovation and adoption in the financial industry.
    In conclusion, while a complete transition to blockchain is not imminent, blockchain technology is poised to play a major role in the future of finance, offering a range of benefits and opportunities for financial institutions and individuals alike.

    Apr 30

  • Riaz Haq

    Pakistan eyes expansion of digital wallet coverage


    https://coingeek.com/pakistan-eyes-expansion-of-digital-wallet-cove...

    A digital wallet project that the Pakistani government initiated two months ago has been a massive success, closing the gender gap and reaching citizens with disability, the country’s prime minister says.

    PM Shehbaz Sharif commissioned the distribution of the Ramazan Relief Package in early April, partly via digital wallets for the first time. The Rs 20 billion ($71 million) initiative was overseen by the IT & Telecommunications Ministry and sought to make welfare and aid distribution “efficient, transparent, and respectful.” It aligned with the Digital Nation Pakistan Bill, which was passed by parliament in January and seeks to transition Pakistan into a digitally empowered nation.

    Speaking at a recent event, Sharif lauded the success of digital wallets in boosting efficiency and transparency in fund transfers.

    “Through digital wallets, 79% of the funds in the relief program were transferred seamlessly and transparently,” the PM stated.

    Starting 2026, all welfare distribution will be done via digital means, he added.

    According to local outlets, over 900,000 Pakistanis received aid through their newly created digital wallets and conducted nearly 2 million transactions. Significantly, a sizable portion of the users were women, which the PM says plays a role in reducing the gender gap in the program. Over 2,500 disabled people also used the digital wallets, further underscoring the initiative’s importance in promoting diversity and inclusion.

    “This is more than a one-time relief package. It’s about fostering long-term digital habits that empower individuals and integrate them into the formal economy,” commented IT Minister Shaza Fatima Khawaja.
    Pakistan is undergoing a digital payment transformation. In the last three months of 2024, retail digital payments grew 12%, according to data from the central bank. Pakistanis made over three billion transactions worth Rs154 trillion ($554 billion).

    This growth is attracting global giants. In March, Google Wallet (NASDAQ: GOOGL) announced its entry into the Pakistani market, partnering with half a dozen local banks to allow cardholders to make payments via the app.

    “The launch of Google Wallet is a solid testament to Pakistan’s rising digital payments adoption and will serve as a signal to other global payment solutions about the market’s potential,” commented Mutaher Khan, whose Data Darbar provides market intelligence in the country.

    However, the market still faces significant challenges. One of these is the country’s massive undocumented economy, which the government reckons is as big as the formal economy. Operators in this cash-based market operate beyond the scope of the government and pay no taxes; this makes digital payments a direct threat as they would expose the market.

    May 12