Pakistan Considers Blockchain for Remittances, Aims to Cut Costs by 5%

Pakistan, a top recipient of remittances from abroad, is considering the use of blockchain technology to streamline its multibillion-dollar remittance process. Bilal bin Saqib, chief adviser to the finance minister and a member of the newly established Pakistan Crypto Council (PCC), announced this potential shift during an interview. Overseas Pakistanis sent over $31 billion in 2023-24 through traditional channels, which are often slow and expensive, with fees sometimes exceeding 5%.

Remittances are a critical source of income for many countries, acting as a financial buffer during crises and a driver of sustainable growth. The PCC plans to investigate blockchain-based remittance solutions to reduce costs and delays. Additionally, the council will invest in blockchain education, upskilling programs, and Web3 development to cultivate talent, boost employment, and drive economic growth. Blockchain technology could improve fund transfers from overseas by eliminating intermediaries like correspondent banks, potentially reducing the cost of cross-border transactions significantly.

Despite a 2018 circular from the State Bank of Pakistan (SBP) banning financial institutions from facilitating crypto transactions, Pakistan is one of the Asian nations featured in the 2024 Global Crypto Adoption Index. A significant percentage of the population uses digital assets to hedge against inflation and volatility in the foreign exchange rate and the broader economy. This reflects significant demand despite the regulatory vacuum. With over 60% of Pakistan’s population under 30, the tech-savvy youth are poised to drive blockchain and Web3 innovation. The PCC aims to unlock this untapped potential by advocating for a clear, progressive regulatory framework.

The PCC is also exploring initiatives like tokenizing real-world assets and establishing regulatory sandboxes while ensuring compliance with Financial Action Task Force (FATF) standards. The FATF removed Pakistan from the gray list in 2022. However, illegal crypto outflows are a concern. Without regulation, cryptocurrencies can facilitate untracked cross-border transactions, exacerbating dollar shortages. The PCC’s first step is to establish a robust, transparent regulatory framework mandating know-your-customer (KYC) and anti-money laundering (AML) compliance for all crypto activities.

Pakistan's exploration of blockchain for remittances is part of a broader effort to modernize its financial sector and reduce reliance on traditional remittance channels. By adopting