Finally plugging into crypto

The government has followed through on plans announced in late February and established the Pakistan Crypto Council. The Pakistani state has been a latecomer to the global crypto party, leaving the over 20 million active Pakistani users in the digital assets market in a regulatory grey area. The Crypto Council seeks to put an end to this state of limbo, aiming to establish clear guidelines for digital asset adoption and bring transparency and stability to a sector often notorious for the exact opposite. The council, constituted by Prime Minister Shehbaz Sharif, will be chaired by the finance minister and includes key officials such as the State Bank governor, and federal secretaries for law and justice and information technology. The chief advisor to the finance minister on the Pakistan Crypto Council has been appointed as its chief executive, bringing his expertise in blockchain technology, investment strategy, and digital innovation on board. More subject-matter experts are expected to join as the council moves forward. The establishment of clear regulatory guidelines will be supplemented by engaging with international crypto and blockchain organisations to ensure best practices. It is hoped that this will encourage a crypto ecosystem driven by responsible innovation and close cooperation with key players in the industry such as fintech startups, investors and blockchain developers, protecting consumers and ensuring financial security through robust legal and compliance frameworks.

International collaboration will also be geared towards ensuring compliance with anti-money laundering and counterterrorism financing rules, one of the major criticisms of crypto currencies being that they enable nefarious actors to work around existing global and national rules. Crypto’s environmental concerns are also worth noting. According to UN estimates, if the cryptocurrency bitcoin was its own country, its energy consumption during the 2020-21 period would have been higher than all of Pakistan’s. This is down to the tremendous amounts of processing power it takes to mine assets like crypto currency and power block chains. And it is countries like Pakistan that will suffer the most if the mining of digital assets exacerbates global warming. Aside from crime and environment, the overall debate about whether crypto-fueled speculation is even good for the economy is far from settled. These and other problems have slowed the adoption of crypto not just in Pakistan but many countries in both the developing world and the rich countries.

So what explains the country’s rather quick turnaround from crypto scepticism towards steady, regulated adoption? Some experts point to the boost for digital assets and currencies from US President Donald Trump’s return to the White House, making a crypto advocate the most powerful man in the world’s largest economy. However, growing international adoption and legitimacy will not necessarily make crypto a success in Pakistan. While most local experts agree that the establishment of the Crypto Council is a good first step, there are some concerns about the involvement of the bureaucracy and what impact that will have on the workings of the council. The local regulators and administrators are not exactly renowned for their ability to get things done. One thing that might have to change is the increasingly negative attitude the government has taken towards digital content and the sporadic net slowdowns and shutdowns this seems to have resulted in. Digital currencies and assets would be rather difficult to access and trade in such an environment. That being said, at this stage, it is simply encouraging to see a Pakistan not content to watch the rest of the world move forward with a new technology and, instead, working to catch up.