Pakistan May Fast-Track Crypto Framework to Aid Banks!
KARACHI - The Government of Pakistan is reportedly considering a rapid and large-scale adoption of cryptocurrencies for banks, foreign exchange companies, and the gold trade, a move that could fundamentally reshape the nation's financial landscape. According to sources who spoke to Dawn after a series of high-level meetings this week, the government appears to be in a "hurry" to integrate virtual assets into the formal economy as a potential solution to persistent economic challenges.
The discussions, which involved senior officials from the State Bank of Pakistan (SBP), the finance ministry, and the security establishment, along with representatives from commercial banks and the Pakistan Crypto Council (PCC), are part of a broader strategy to stabilize the volatile exchange rate and curb the smuggling of US dollars. While the SBP has traditionally maintained a cautious stance, the intensity of the new push signals a significant potential shift in national policy.
The High-Level Push: A New Economic Frontier?
The impetus for this accelerated crypto agenda appears to have come from two high-stakes meetings. The first, on Monday, focused on tackling the dollar's rising price and illegal currency outflows. However, a follow-up meeting on Tuesday took a sharp turn, with the agenda being almost entirely dominated by the potential of virtual currencies. A senior banker who attended revealed the intensity of the focus. "The presentation and subsequent Q&A on crypto took 80 per cent time of the meeting," he said.
The presentation was reportedly led by Bilal Bin Saqib, the CEO of the Pakistan Crypto Council and the Prime Minister’s Special Assistant on Blockchain. "We were told that the cryptos are the future currency for the changed economic world," the banker added.
The Proposed Framework
The discussions are moving beyond theoretical benefits and into practical implementation. Participants were briefed on a potential framework that would see cryptocurrencies formally integrated into the regulated financial sector.
Under the proposed model, the State Bank of Pakistan would issue licenses for crypto trading to banks and other financial institutions. This would transform crypto from a grey-market activity into a mainstream financial service. One banker even hinted at the possibility of opening physical field offices in major cities to facilitate access to virtual assets.
The SBP's Cautious Stance and the Path to Legislation
While the government's enthusiasm appears high, the State Bank has historically been deeply skeptical. However, there are signs this is evolving. On July 9, SBP Governor Jameel Ahmed confirmed that the central bank was preparing to launch a pilot for a Central Bank Digital Currency (CBDC) and was also finalizing legislation to regulate virtual assets.
The SBP and the Finance Division are reportedly now in active discussions with the Pakistan Crypto Council to develop this legal framework, a process that will be critical in balancing the government's push for rapid adoption with the central bank's mandate for financial stability.
The Elephant in the Room
Significant concerns remain about the immense risks associated with cryptocurrencies. A financial expert highlighted the primary issue: extreme price volatility. "Risks are still high, since the prices of cryptocurrencies fluctuate with a wide margin, like Bitcoin prices could jump from $35,000 to $70,000," he said.
This inherent volatility makes cryptocurrencies a highly speculative asset class. However, proponents have reportedly played down these risks, likely focusing on the potential of stablecoins and blockchain technology to provide more efficient and transparent payment rails.
The Economic Imperative: A Tool Against Dollarization?
The timing of these discussions suggests they are driven by an urgent need to solve immediate economic problems, namely stabilizing the Rupee and stopping the flight of US dollars.
Proponents may argue that by creating regulated, digital channels for foreign exchange, the government could reduce the demand for physical US dollars. This could offer a more transparent alternative to the informal Hundi/Hawala systems and reduce the dollar smuggling that plagues its western borders. It is a high-stakes gamble, but one that some in the government seem willing to consider.