A risky race without a rulebook

The spectacular collapse of FTX – once the world’s second-largest cryptocurrency exchange – in late 2022 sent shockwaves through global finance.

Overnight, billions vanished. Celsius, Voyager, Terra-Luna followed suit. These weren’t small start-ups but global giants that evaporated, taking life savings and investor confidence with them. And all of this happened in an industry built around an invisible founder: Satoshi Nakamoto, a ghostly figure no one has ever identified. That’s the paradox of crypto – wildly powerful, yet built on mystery and instability.

And yet, Pakistan is sprinting into this high-risk arena without shoes, safeguards or a map. Crypto is still officially banned in Pakistan. Finance Secretary Imdadullah Bosal clearly reaffirmed this before the National Assembly Standing Committee on Finance and Revenue. Yet we see a rush of announcements: a proposed national bitcoin reserve, a Pakistan Crypto Council, and 2,000 megawatts allocated for mining. This isn’t just policy. This is contradiction.

At the heart of it all is a gaping legal vacuum. There is no formal law here that recognises cryptocurrencies, no licensing regime for exchanges or wallets and no institutional framework aligned with our international obligations. A draft bill reportedly exists but remains unseen, unpassed, and unenforced. Even more alarming: no public education campaign has been launched. Citizens are being swept into high-risk digital speculation without the faintest understanding of what they’re entering or what they could lose.

I raised these concerns formally in a recent session of the National Assembly. The matter was referred to the Standing Committee on Finance and Revenue. The State Bank and the Ministry of Finance could offer no clarity – only contradictions. While crypto remains banned, its promotion continues unchecked. Investors are confused, policymakers are unprepared, and the public is unprotected.

The risks are not hypothetical. El Salvador’s bitcoin experiment led to near disaster: its reserves nosedived, adoption flopped and the IMF warned of fiscal collapse. Nigeria banned exchanges after digital tokens destabilised the naira. Turkey outlawed crypto payments. The Central African Republic quietly abandoned its bitcoin law within a year. Even India, despite its tech muscle, has treaded slowly, issuing repeated warnings through its central bank.

Pakistan must learn from these failures. Tying state resources to an unregulated, volatile asset like bitcoin could wreck our reserves overnight. Encouraging mining in an energy-starved country, where households suffer from blackouts and inflated bills, is regressive. And allowing unchecked trading in a legally grey zone opens the floodgates to scams, money laundering, terror financing and investor manipulation.

Yes, steps have been taken. The appointment of a minister of state for crypto is a start. Diplomatic engagement is commendable. Discussions on a Digital Assets Authority are in motion. But none of this matters without a real law.

Pakistan urgently needs a Digital Assets and Blockchain Act passed through parliament, aligned with FATF standards, and equipped with teeth. This legislation must create a clear licensing system for exchanges, wallets and crypto services. It must establish compliance with global AML (anti-money laundering), KYC (know your customer), and CFT (countering the financing of terrorism) standards. A dedicated regulator, or an empowered SECP, must be authorised to audit, monitor and shut down violators. Mining projects must be tightly controlled and energy impacts transparently assessed. Government-held crypto assets, if any, should be professionally managed, hedged, and reported publicly.

Equally critical: a national awareness drive. Citizens must be informed about the risks, scams, and false promises of crypto. Regulation is not just about control but really also about protection. What we have today is silence, ambiguity, and exposure.

Crypto may well be the future. But it cannot be built on fantasy. If Pakistan does not act now with clarity, caution, and courage, we risk turning digital innovation into a national liability.

The writer is a member of the National Assembly. She holds a PhD in Law, and serves on the National Assembly’s Special Committee on Kashmir.