Pakistan Signals Shift Toward Legalizing Cryptocurrency

Pakistan’s government plans to legalize digital currencies for the first time.
This marks a substantial departure from the country’s earlier anti-crypto mindset.

Pakistan has made a historic decision to legalize cryptocurrency, modifying its long-standing attitude of classifying digital assets like Bitcoin and Ethereum as illegal. The federal government has proposed revisions to the State Bank of Pakistan (SBP) Act, which would allow the SBP to issue currency in both physical and digital forms.

According to The Express Tribune, this modification is a significant step because it incorporates digital currency within the SBP Act for the first time ever. To date, the SBP has regularly rejected ideas involving digital currencies and issued strong warnings against their use.

Pakistan Moves Towards Legalizing Cryptocurrencies

The proposed amendments will enable the central bank to manage currency more flexibly, responding to both traditional banking and the developing digital asset ecosystem. This shift comes after years of tight rules, including the SBP’s 2018 circular prohibiting financial institutions from dealing with cryptocurrency exchanges.

Historically, the SBP has classified cryptocurrencies such as Bitcoin as illegal, warning against their usage due to their extreme volatility and lack of legal protection for investors. The 2018 circular cautioned that virtual currencies lack legal protections and therefore expose individuals to severe risk. However, these new suggestions may signal a shift toward more robust regulatory control and a structured approach to digital assets in Pakistan’s financial sector.

Despite this, recent developments indicate a shift in mindset.Last year, Aisha Ghaus Pasha, the Minister of State for Finance and Revenue, stated that Pakistan would never authorize cryptocurrency. However, the present government appears to acknowledge the potential for digital currencies to play a role in the financial system, which might revolutionize the country’s economic setting.

Although officials have not yet determined a schedule for federal cabinet approval, they consider these proposed reforms critical to Pakistan’s financial sector. By extending the SBP’s authority over digital financial management, the country hopes to build the groundwork for a regulatory framework overseeing digital currencies. This measure demonstrates Pakistan’s determination to upgrade its financial landscape in the face of a rapidly evolving global digital economy.

As the amendments are implemented, stakeholders are acutely monitoring how this new framework will affect cryptocurrency activity in Pakistan, potentially opening the door to further investment and innovation in the digital economy.