CRYPTO
The State Bank of Pakistan’s announcement that it has agreed in principle to regulate digital currencies under the Virtual Assets Bill 2025 has sparked heated debate.
Supporters claim regulation will bring transparency, investor protection, and tax revenue. But let’s pause for a moment and ask a deeper question: since when did the mere act of ‘regulating’ turn something inherently harmful into something legitimate?
We live in a country where alcohol is banned, and theft is a punishable crime. Imagine the absurdity of saying: ‘Alcohol is widespread, so let’s regulate it and collect taxes. Theft is common, so let’s legalise it and take a percentage cut for the exchequer’. Then why is cryptocurrency, which is already recognised worldwide as a tool for money laundering, terror financing and speculative bubbles, suddenly being given the cover of regulation?
Yes, industry groups cite data from Chainalysis and others claiming that over 20 million Pakistanis have dabbled in digital assets. But mass participation does not make something right. Millions of people consume alcohol worldwide -- should Pakistan legalise that too? Popularity cannot be the yardstick for policy when the moral, financial and national security risks are this high.
Cryptocurrency in Pakistan has not evolved as a tool for innovation or payments; instead, it has thrived as a black-market channel for transferring money abroad. We’ve seen this story before: dollar smuggling through exchange companies, hawala networks draining precious reserves, and even Independent Power Producers (IPPs) exploiting loopholes until the government had to intervene. In each case, the solution wasn’t to regulate the wrongdoing but to crack down, reform and bring discipline.
If Pakistan wants to build a sustainable economic future, it should crack down on virtual assets and channel that energy and capital into the real economy -- our stock market, our industries and our exports
Why should crypto be treated differently? If anything, its anonymous, borderless nature makes it even more dangerous than hawala.
Rather than giving digital assets a regulatory blessing, Pakistan should redirect this speculative capital into productive investment avenues -- our own Pakistan Stock Exchange (PSX). A thriving equity market channels savings into businesses that generate jobs, exports and growth. Every rupee invested in PSX strengthens the economy. Every rupee locked in a crypto coin is one more step into a virtual casino.
If regulators want to protect investors, the real solution is not to regulate gambling but to discourage it, restrict it and provide safe, productive alternatives.
Those arguing for regulation often reduce the debate to the issue of tax revenue. But is tax revenue worth legitimising a product that undermines our Shariah principles, financial sovereignty and global credibility? If revenue were the only measure, then why not legalise corruption itself, issue ‘corruption permits’ and collect a levy from bribe-takers? This line of thinking is a slippery slope that erodes the moral foundations of governance.
Pakistan has two choices. One, ban and crack down on digital currencies, just as we cracked down on illegal forex traders and dollar smugglers. Seize the illicit flows, protect reserves, and cut off a money laundering pipeline.
Two, regulate and legitimise crypto, giving it a cloak of respectability, even as it continues to siphon capital abroad and expose our economy to speculative shocks.
The first option strengthens Pakistan’s financial system. The second undermines it.
Regulation is not a magic wand. Some things must be prohibited, not legitimised. Cryptocurrency is one of them. If Pakistan wants to build a sustainable economic future, it should crack down on virtual assets and channel that energy and capital into the real economy -- our stock market, our industries and our exports.
Anything less is a dangerous compromise.
The writer is a CIO at a multinational and teaches financial markets in Pakistan. He can be reached at: hissan3gmail.com