Our crypto dilemma

Pakistan has often been accused of being slow to adopt new technologies. This reluctance has repeatedly cost the nation opportunities to tap into lucrative markets, and nowhere is this more evident than in the case of cryptocurrency. Last year, Bitcoin – the flagship cryptocurrency – surged past the $100,000 mark for the first time following Donald Trump’s victory in the US. But for Pakistan, this monumental moment passed in muted silence. The country’s traders, bound by a ban on cryptocurrencies, could only watch from the sidelines as the world reaped the benefits of this rally. Now, however, the winds of change appear to be sweeping across the nation. Senator Dr Afnan Ullah Khan of the PML-N has proposed the Virtual Assets Bill 2025, a groundbreaking legislative effort to regulate Pakistan’s burgeoning digital asset market. The bill not only acknowledges the undeniable presence of cryptocurrencies in Pakistan’s economic landscape but also aims to legitimise and regulate the space through measures like virtual asset zones – designated areas for crypto trading and management. If enacted, this legislation could be the first step towards integrating Pakistan into the global digital economy.

The reality is that cryptocurrency trading in Pakistan has long existed, albeit in the shadows. Unofficial estimates suggest that Pakistanis hold at least 20 million registered accounts on various exchanges. In 2022, the blockchain analytics firm Chainalysis ranked Pakistan sixth on its Global Crypto Adoption Index. Despite the lack of regulation, the annual trading volume of digital assets in Pakistan is estimated to range between $18 billion and $25 billion. This hidden economy represents a missed opportunity for the state to generate much-needed tax revenue. For comparison, India taxes crypto gains at a hefty 30 per cent, adding significantly to its fiscal resources. Pakistan could devise a similar taxation framework, creating a win-win scenario: increased revenue for the government and a thriving environment for crypto traders. But where there is opportunity, there is also risk. One of the primary reasons for the initial ban on cryptocurrencies was the potential for misuse by criminal elements. A report by Chainalysis highlighted how criminals increasingly use cryptocurrencies to obscure the origins and movements of illegal funds. In a country grappling with internal and external security threats, ensuring that digital assets are not exploited for illicit purposes will be a monumental challenge.

Yet, banning cryptocurrencies entirely is not a solution; it’s an abdication of responsibility. Most crypto traders in Pakistan are not criminals but ordinary citizens trying to secure a better future. From students struggling to pay tuition fees to workers supplementing meagre incomes, many see crypto trading as a lifeline. Denying them access to this digital frontier only exacerbates their financial struggles. The government’s blanket ban on cryptocurrencies reflects a broader pattern of avoiding complex problems rather than addressing them. Instead of investing in the necessary regulatory and enforcement mechanisms, authorities have opted for an out-of-sight, out-of-mind approach. This strategy is not only shortsighted but also detrimental to Pakistan’s technological and economic advancement. The Virtual Assets Bill 2025 offers a chance to change this narrative. By creating a regulated framework for digital assets, the government can mitigate risks while fostering innovation. Comprehensive oversight mechanisms, public awareness campaigns, and collaboration with international organisations can help address concerns about illegal activities. At the same time, empowering legitimate traders can unlock new economic opportunities and place Pakistan on the global crypto map. In a world increasingly dominated by digital currencies, Pakistan cannot afford to lag. Many businesses worldwide have already begun accepting cryptocurrencies as a mode of payment, signalling a shift in the global economic paradigm. It is time for Pakistan to embrace this change, not resist it. The Virtual Assets Bill is a step in the right direction, but its success will depend on the government’s willingness to tackle the challenges head-on.