Pakistan's Bitcoin Plans Face IMF Concerns Over Legality and Energy Use

The International Monetary Fund (IMF) has raised significant concerns over Pakistan's recent plans to hold Bitcoin as a long-term investment, a move that was officially revealed at the Bitcoin Vegas 2025 conference. This initiative has sparked discussions about whether Pakistan is following in the footsteps of El Salvador's crypto push, dubbed "El Salvador 2.0." The IMF's primary concerns revolve around the legality of cryptocurrencies in Pakistan and the potential impact on the country's energy resources, particularly given its ongoing energy shortages.

The IMF has sought clarification from Pakistan's Finance Ministry regarding the legal status of cryptocurrency mining and the rationale behind allocating a substantial amount of electricity for Bitcoin mining and AI data centers. This move is part of Pakistan's broader strategy to attract blockchain firms, autonomous miners, and AI companies. The IMF's concerns are amplified by the country's existing economic challenges and the need for sustainable energy solutions.

Pakistan's plans to integrate digital assets into its national economy include utilizing excess electricity for Bitcoin mining. The government aims to power Bitcoin mining and data centers nationwide, leveraging the excess energy to support this initiative. However, the IMF's reservations about the legality and economic implications of this plan have cast doubt on its feasibility. The IMF has asked for urgent explanations regarding how electricity used in mining and digital businesses will be controlled, given the country's ongoing energy shortages.

The legal status of cryptocurrencies in Pakistan remains unclear, despite the government's efforts to promote digital integration. The IMF has noted that Pakistan has not established official guidelines for digital assets, which raises concerns about the regulatory framework. The State Bank of Pakistan has issued a public clarification that cryptocurrency is not illegal, but the lack of a clear legal framework has led to regulatory confusion.

Pakistan's digital asset ambitions are overseen by the Pakistan Digital Asset Authority (PDAA), which was approved in May. The PDAA will regulate digital asset platforms, including exchanges, wallets, stablecoins, and decentralized finance (DeFi) systems. The government has also formed a National Crypto Council to monitor and regulate digital assets, with Changpeng Zhao, founder of Binance, serving as an adviser. Zhao is expected to oversee the development of crypto regulations, the enhancement of blockchain infrastructure, and the utilization of digital assets in the country.

The IMF's concerns and the lack of a clear legal framework for cryptocurrencies in Pakistan have raised doubts about the feasibility of the country's digital asset plans. The outcome of the IMF's discussions with Pakistan will be crucial in determining the future of Pakistan's Bitcoin reserve and its broader digital asset ambitions. The government's plans to utilize excess electricity for Bitcoin mining and the formation of the PDAA are significant steps towards integrating digital assets into the national economy, but they must address the IMF's concerns to ensure sustainability and legality.