Pakistan Proposes Digital Asset Framework to Combat Money Laundering, Terrorism Financing

Pakistan has proposed a regulatory framework for digital assets that prioritizes compliance with international standards, particularly those set by the Financial Action Task Force (FATF). This framework is designed to address concerns related to terrorism financing, money laundering, and Know Your Customer (KYC) controls. The Federal Investigation Agency (FIA) introduced this proposal, with Director Sumera Azam highlighting the shift in Pakistan's approach to digital finance. Azam stated that the policy aims to balance technological advancement with national security imperatives, marking a significant change in the country's stance on digital assets.

The proposed framework is subject to legislative approval and input from digital asset firms operating within Pakistan. The rollout is expected to begin in 2026 and will be implemented in multiple phases. This move comes after years of an anti-crypto stance by Pakistani officials, which reached a peak in 2023 when a country-wide ban on digital assets was proposed. The formation of the Pakistan Crypto Council in February 2025 signaled a regulatory shift, aiming to establish clear crypto regulations and attract foreign investment. The Council, led by CEO Bilal bin Saqib, is exploring the use of excess energy for Bitcoin mining to position Pakistan as an international hub for crypto mining. The Council has also appointed Binance co-founder Changpeng Zhao as a crypto adviser to guide its policy efforts.

The new framework aligns with FATF Recommendation 15, which advocates for the adaptation of Anti-Money Laundering (AML) and Counter Terrorism Financing (CTF) regulations to address the challenges posed by virtual assets. This policy is part of a broader effort to incorporate digital finance into the national economy. The framework not only focuses on enforcement but also aims to build institutional capacity, encourage responsible innovation, and integrate Pakistan into the global digital economy. This comprehensive approach is designed to curb risks related to money laundering, terrorism financing, and financial instability while harnessing the transformative potential of digital assets.

The government is also working on regulatory frameworks to ensure compliance with international standards while safeguarding consumer interests. This includes plans to use surplus electricity for Bitcoin mining, which could further boost the country's digital finance sector. The announcement of this policy framework marks a significant milestone in Pakistan's journey towards embracing digital finance, aligning with global standards and fostering a secure and innovative financial ecosystem. The policy will undergo a review by stakeholders and is expected to receive legislative approval, with phased implementation set to begin next year.