So far, Pakistan’s stance towards digital currencies has been quite harsh, granted that the country’s national bank and government often warned businesses, individuals, fintech firms, and banks to abstain from processing crypto-based payments, and offering digital currency-related services.

Pakistan adopts new crypto regulation,
following FATF recommendations

things are slowly changing. Since digital currencies can also be used for
illegal purposes, Pakistan’s Financial Action Task Force (FATF) has recently
recommended the adoption of a new regulatory framework, meant to limit the
potential for crypto-based illegal activity, while also allowing local
financial regulators to better oversee the market. As such, Pakistan was forced
to accept the use of digital currencies despite its prior negative stance.

will only happen with the adoption of the new regulatory framework, which
classifies all crypto-related companies as Electronic Money Institutions
(EMIs). In other words, this means that companies responsible for processing
crypto payments, or offering crypto-based services, will have to apply for a
special license, and comply with all regulations. Failure to do so will lead to
activity suspension, or even a loss of license. Generally, these regulations
refer to AML/KYC policies, and tracking of user funds to ensure that no illegal
activity is happening. While
close monitoring of the crypto market is somewhat against its principles,
things are moving forward for the Pakistani crypto market. This is great news
granted that a significant percentage of the country’s population remains

Is a CBDC on its way?

from adopting new regulations, recent reports indicate that the Pakistani
Government and Central Bank are considering launching a central bank-backed
digital currency (CBDC) by 2025. As
such, Jameel Ahmad, the deputy governor of Pakistan’s State Bank (SBP),
recently gave a press statement, where he mentioned that his institution was working
on a CBDC, for the purpose of “promoting
financial inclusion and reducing inefficiency and corruption.”
argument given for the CBDC launch was: “It
is our government’s policy to encourage the use of e-commerce amongst the
public through awareness campaigns to promote a culture of e-commerce, which
supports electronic business transactions at national, regional and
international levels.”

on such a project certainly makes sense granted that the bank is planning to
become fully digitized by 2030, and what better way to achieve this goal, than
releasing an actual digital currency? So
far, no additional information on the central bank digital currency has been
given. With this in mind, we don’t know whether its value will be tied to the
Pakistani rupee, or if its focus will be on facilitating P2P and cross-border
payments, or on handling monetary settlements between banks and other

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Based on everything that has been outlined so far, Pakistan has now become one of the newest countries to announce work on their own CBDC. It will certainly be interesting to see whether the popularity of the CBDC trend will exceed the cryptocurrency market, or if decentralized, transparent and semi-anonymous cryptocurrencies will prevail.

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