Pakistan seeks clearer regulations for cryptocurrency adoption

Pakistan is on the verge of a digital finance transformation, with over 20 million citizens using cryptocurrencies like Bitcoin and Ethereum. This shift is driven by economic challenges such as high inflation and a weak currency. Many people in major cities like Karachi and Lahore have turned to digital currencies for financial security and more accessible financial services. Despite the rising interest, the State Bank of Pakistan (SBP) has been cautious. The central bank has raised concerns about the volatility of cryptocurrencies and their potential misuse in illegal activities. In 2018, the SBP banned financial institutions from dealing with crypto, but it eased these rules slightly in 2019. However, without clear regulations, many potential users remain hesitant. Cryptocurrencies could provide significant benefits to Pakistan, especially for its 100 million unbanked citizens. By utilizing blockchain technology, the country could improve financial inclusion, reduce remittance costs for migrant workers, and enhance overall economic stability. Traditional banking costs can be high, but crypto transactions typically have lower fees. Major global tech firms are beginning to explore opportunities in Pakistan’s digital finance space. For instance, Google Pay has introduced features for online payments and money transfers, signaling rising interest in tech-driven finance. However, these services still rely on conventional banks, which may limit their accessibility for unbanked individuals. The SBP's current restrictions deter widespread crypto adoption. Recent court decisions and investigations related to cryptocurrency have added to uncertainty in the market. To navigate this landscape, experts suggest that the government should focus on developing comprehensive regulations instead of outright bans. Examples from other countries show potential paths forward. El Salvador's adoption of Bitcoin as legal tender aimed to boost financial access, while Switzerland offers clear guidelines that foster innovation. India’s approach combines taxation with regulation, allowing crypto to operate under official oversight. For Pakistan to maximize economic benefits from cryptocurrencies, it must establish a dedicated regulatory authority and engage with blockchain experts. Education on the risks and opportunities of digital currencies is also crucial. Support for blockchain solutions could further enhance the financial landscape. With a young, tech-savvy population and rising smartphone use, Pakistan has the potential to lead in digital finance. Striking a balance between clear regulations and innovation is key to achieving this goal and unlocking the full benefits of blockchain technology for the country.