Qudsia Bano

As the government has signalled interest in developing a structured framework to formalize cryptocurrency, experts warn that without proper oversight, the risks associated with digital assets could outweigh the benefits.

Talking to WealthPK, Malik Muhammad Bostan, Chairman of the Exchange Companies Association of Pakistan (ECAP), emphasized the need for strict control and monitoring to prevent speculation and financial instability. He recommended that Pakistan develop its own blockchain infrastructure rather than relying on external platforms.

“The central bank must establish a mechanism to track and regulate crypto transactions. Without a clear framework, we risk opening the economy to financial crimes, including money laundering and tax evasion,” he said. The government has already sought the international bodies’ guidance, including the United States, on best practices for cryptocurrency regulation.

Recently, the Finance Division proposed the establishment of a National Crypto Council to oversee the sector. This advisory body would consist of government representatives, regulatory authorities, and industry experts to ensure a structured approach to digital asset management. However, not all stakeholders believe the creation of a separate council is necessary.

Experts caution that while cryptocurrencies offer new investment opportunities, the risks remain substantial. Dr. Maryam Anwar, a former member of the Board of Investment, stressed the importance of creating a safe and transparent regulatory framework before embracing cryptocurrency adoption. “Cryptocurrencies present both opportunities and risks.

If Pakistan rushes into adoption without stringent regulations, it could lead to capital flight, illicit transactions, and increased financial volatility. A well-structured framework, incorporating blockchain oversight and anti-money laundering measures, is essential to ensure that crypto benefits the economy rather than harming it,” she stated.

Meanwhile, Bilal Raza, a senior blockchain developer and consultant, highlighted the need for a phased approach to crypto integration. “Pakistan should first experiment with a central bank digital currency (CBDC) or a regulated stablecoin before fully opening the market to private cryptocurrencies. Many developed economies are testing digital currencies in controlled environments.

This approach would allow the authorities to assess risks, educate investors, and build an infrastructure before widespread adoption,” he explained. The volatility of digital assets, cybersecurity threats, and regulatory challenges have led several countries to either ban or impose strict restrictions on crypto trading. Pakistan, he argues, must learn from these experiences and take measured steps to ensure that digital assets do not disrupt financial stability.

As discussions continue, the success of Pakistan’s crypto adoption will depend on how effectively the regulators address security, transparency, and market stability concerns. While the stakeholders remain divided on the best approach, one thing is clear — caution is necessary as the country navigates the complexities of the digital financial ecosystem.

Credit: INP-WealthPk