Pakistan Navigates Crypto Paradox: Ban Meets Emerging Regulatory Framework

The State Bank of Pakistan (SBP) has reaffirmed its ban on crypto trading, maintaining a firm stance against the recognition and authorization of digital assets for issuance, sale, purchase, exchange, or investment within the country. This regulatory position, first articulated in 2018, continues to shape the landscape of digital finance in Pakistan despite the global rise in cryptocurrency adoption and innovation [2].

The SBP's official position remains unchanged, emphasizing that cryptocurrencies are not considered legal tender and are not authorized for use in financial transactions under the supervision of the central bank. This regulatory framework aims to safeguard the stability of the national financial system and protect consumers from the risks associated with the high volatility and speculative nature of digital assets [2].

However, recent developments indicate a potential shift in the country’s approach to digital assets. In March 2025, the government established the Pakistan Crypto Council, chaired by the finance minister, signaling a more open attitude toward the integration of digital currencies into the national economy. This initiative reflects an evolving regulatory perspective, possibly in response to growing interest among investors and businesses in the benefits of blockchain technology [2].

By July 2025, the Virtual Assets Ordinance was enacted, paving the way for the establishment of the Pakistan Virtual Assets Regulatory Authority (PVARA). The authority is tasked with formulating legal, licensing, and regulatory policies for the digital asset sector. This move suggests a structured and cautious approach to the regulation of cryptocurrencies, balancing innovation with the need to maintain financial stability and consumer protection [2].

The SBP has also confirmed that it is actively working on the development of a Central Bank Digital Currency (CBDC), aligning with global trends where central banks are exploring the potential of digital fiat money. While the US government remains skeptical of government-issued digital currencies, citing privacy concerns, Pakistan’s approach appears to be more receptive to exploring the role of digital assets in the future of its financial system [2].

The introduction of the Virtual Assets Ordinance and the formation of PVARA highlight the government’s recognition of the growing interest in digital assets. Reports suggest that a significant number of Pakistani citizens are already engaging in cryptocurrency trading and investment, indicating a need for the regulatory framework to catch up with market realities. The challenge for regulators will be to create a balanced environment that fosters innovation while mitigating the risks associated with digital currencies [2].

As the global financial ecosystem continues to evolve, the SBP’s continued enforcement of the crypto trading ban underscores the importance of a cautious and well-informed regulatory approach. The development of PVARA and the exploration of CBDCs suggest that Pakistan is beginning to lay the groundwork for a more structured integration of digital assets into its financial framework. This will require close collaboration between regulators, financial institutions, and market participants to ensure that the benefits of digital innovation are realized without compromising financial stability [2].

Source: [1] Banks Floating Average Exchange Rates for August 2025 (https://www.sbp.org.pk/Cal/2025/Sep.asp) [2] Crypto moment? (https://www.dawn.com/news/1939335)