Bitcoin News Today: Pakistan and El Salvador Form Crypto Alliance to Advance Bitcoin Strategy

Pakistan and El Salvador have entered into a formal bilateral agreement to advance cryptocurrency cooperation, marking the first instance of a cross-border pact that prioritizes digital assets in foreign policy. This deal, focused on knowledge-sharing, follows a recent meeting in South America between Bilal bin Saqib, Pakistan’s Special Assistant to the Prime Minister on crypto and blockchain, and El Salvador’s President Nayib Bukele. The meeting aimed to establish a partnership for transferring knowledge about cryptocurrency governance and strategy.

El Salvador has been at the forefront of Bitcoin adoption, with its total Bitcoin holdings now standing at 6,238 BTC, equivalent to approximately $745 million at current market rates. This accumulation is part of a broader national strategy initiated in September 2021, when El Salvador became the first country to adopt Bitcoin as legal tender. Despite global scrutiny, El Salvador has continued to purchase the asset and integrate blockchain-based technologies into its economy, reflecting President Bukele’s policy of positioning Bitcoin as a long-term sovereign asset.

In contrast, Pakistan is in the early stages of exploring a centralized crypto strategy. The nation’s government recently announced its intent to create a strategic Bitcoin reserve with state backing. However, its plans to subsidize energy for Bitcoin mining were blocked by the International Monetary Fund (IMF), which has raised concerns over the role of cryptocurrency in state governance. Earlier this month, the IMF declined Pakistan’s proposal to allocate 2,000 megawatts of electricity for Bitcoin mining operations, citing its stance against the inclusion of crypto in official economic frameworks. The rejection comes in the context of Pakistan’s existing $7 billion loan agreement with the IMF, which remains in effect until 2027. The fund has consistently discouraged countries under its financial support programs from adopting or promoting digital currencies.

The new alliance with El Salvador could help Pakistan navigate some of these institutional hurdles. By accessing insights into how El Salvador has structured its Bitcoin acquisitions, handled regulatory frameworks, and continued crypto operations despite IMF pressure, Pakistan may be able to develop a more sustainable strategy tailored to its own constraints. While both countries are at different stages of crypto integration, the partnership formalizes efforts to exchange technical, policy, and economic knowledge. For Pakistan, aligning with a country that has embedded Bitcoin into national governance may also provide leverage in ongoing global discussions about digital asset legitimacy.

El Salvador's Bitcoin strategy has evolved since 2021, when it became the first nation to adopt the cryptocurrency as legal tender. In January, the country's Congress reversed the mandatory acceptance requirement for Bitcoin payments, fulfilling a key IMF condition while preserving the government's ability to hold the cryptocurrency as a reserve asset. This move provides breathing room for El Salvador's administration as it balances its cryptocurrency ambitions with traditional multilateral financial arrangements.

The IMF's assessment of El Salvador's program focuses on strengthening public finances, rebuilding external buffers, and enhancing governance frameworks to create conditions for stronger growth. However, the Fund warned of downside risks from escalating global trade tensions and tighter immigration policies that could negatively impact remittances and growth. Against this backdrop, the IMF emphasized the importance of sustaining reform momentum and standing ready to activate contingency plans.

Pakistan's partnership with El Salvador is a groundbreaking move aimed at achieving economic independence through Bitcoin and digital asset innovation. The new bilateral relationship will see Pakistan attempt to mirror El Salvador's Bitcoin accumulation strategy, despite the IMF's opposition. This collaboration is part of a broader effort to expand public-sector crypto adoption and foster economic growth through digital asset innovation.

The successful IMF review provides breathing room for El Salvador's administration as it navigates the complexities of balancing cryptocurrency ambitions with traditional financial obligations. The program's focus on strengthening public finances, rebuilding external buffers, and enhancing governance frameworks is crucial for creating conditions for stronger growth. However, the IMF's warnings about downside risks from global trade tensions and immigration policies underscore the need for sustained reform momentum and contingency planning.

El Salvador's Bitcoin success sets a blueprint for sovereign cryptocurrency reserves to serve as a viable asset class for nations seeking diversification. The country's experience demonstrates that it is possible to maintain compliance with international financial obligations during periods of volatility, provided there is clear and consistent communication regarding Bitcoin policy. This partnership between Pakistan and El Salvador represents a significant step forward in the global adoption of cryptocurrencies and highlights the potential for digital assets to drive economic growth and innovation.