Pakistan moves to regulate cryptocurrency, CBDCs as legal tender

The State Bank of Pakistan (SBP) announced a package of policy proposals on Nov. 4 that, if accepted, would legalize digital assets such as cryptocurrencies as legal tender throughout the country. 

In a meeting chaired by SBP governor Jameel Ahmad, the Monetary Policy Committee (MPC) reportedly submitted amendments to its standing policy that would allow state banks to issue digital currency. The proposed amendments would also impose penalties on digital currency issuers operating without approval. 

While the proposals would still require approval at the next stage of government, if they were to pass it could pave the way for both a central bank digital currency (CBDC) — ostensibly a government-issued digital rupee. 

However, the report also indicates that state banks would also be allowed to process digital payment services. This could facilitate blockchain-based transactions including cryptocurrency buying, selling, and trading. 

Cryptocurrency adoption in Pakistan

The MPC had previously demonstrated a reluctance to embrace cryptocurrency. As Cointelegraph reported, in May 2023, then Minister of State for Finance and Revenue Aisha Ghaus Pasha led reporters to believe that the country was moving to ban cryptocurrency. 

However, she was replaced by former Habib Bank Limited CEO Muhammad Aurangzeb in March 2024, who was quick to signal a reverse of the MPC’s anti-crypto stance.

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Interest rate cut

The MPC also announced a 2.5% interest rate cut on Nov. 4, along with a slate of reported economic improvements. Citing a “sharp decline in food inflation, favourable global oil prices and absence of expected adjustments in gas tariffs and PDL rates,” the MPC offered an optimistic prognosis for the next fiscal year. 

“Overall, the MPC expects real GDP growth in FY25 to be better than its earlier assessment, while remaining in the range of 2.5 – 3.5 percent.”

This could prove a bullish economic indicator for Pakistan’s cryptocurrency and digital assets market, assuming the SBP amendments pass. It would also limit illicit trading and establish penalties for non-authorized digital asset exchange facilitators. 

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