The hasty transition from a crypto ban to its sweeping adoption is naturally generating skepticism.
Pakistan Prime Minister Shehbaz Sharif lauded U.S. President Donald Trump as a “man of peace” and the “savior of South Asia” during the inaugural Board of Peace meeting on Thursday. Following the meeting of the board – which was put together by Trump to oversee international stabilization efforts in Gaza under a United Nations Security Council Resolution – Pakistan is expected to announce the participation of its troops in the peacekeeping mission. In addition to Gaza, Pakistan is also expected to play a major role in diplomacy with Iran, where Trump is contemplating military strikes.
These developments follow months of the Pakistani civil-military leadership’s wooing of Trump, which has resulted in the country drawing closer to the United States. This diplomatic approach is having an increasingly tangible impact on the policymaking in Islamabad – and one arena where Pakistan is making an offering for Trump is cryptocurrency.
Last month, Pakistan signed an agreement with a firm connected to World Liberty Financial (WLF), a cryptocurrency business launched in September 2024 by the U.S. president’s family. Pakistan’s army chief, Field Marshal Asim Munir, stood alongside the WLF cofounder Zachary Witkoff during the signing of the memorandum of understanding in Islamabad on January 14.
Munir, who became the first to take up the newly created position of Pakistan’s Chief of the Defense Forces (CDF) last year, has benefited from Trump’s vote of confidence to brutally suppress dissent at home.
The Pakistani leadership’s rapid opening of the country to global crypto players put a digital-age spin on the military establishment’s decades-old policy of allowing its assets to be used for the geopolitical gains of the highest bidder.
As is often the case, Pakistan’s reward for its services to the Trump agenda, from crypto to Gaza, is expected to have a prominent fiscal component. The United States, on multiple occasions, has facilitated Pakistan’s bailout agreements with the International Monetary Fund (IMF) in exchange for military deals and agreements. Last year, the Trump administration exempted Pakistan from a $397 million aid cut in security assistance.
This is the context for Pakistan’s crypto gambit.
Last year, Pakistan abruptly moved on from its long-upheld ban on cryptocurrencies to form the Pakistan Crypto Council for the development of blockchain technology and digital assets. Islamabad also unveiled its crypto regulator, the Pakistan Virtual Asset Regulatory Authority (PVARA). On February 20, the new authority officially launched its crypto testing framework in line with the Finance Ministry’s plans to establish a digital asset ecosystem at home and align it with the global crypto market. In December 2025, the government also gave initial clearance for Binance and HTX to connect Pakistan with international investors.
However, the hasty transition from a crypto ban to sweeping adoption is naturally generating skepticism.
“There has been no transparency regarding the move towards cryptocurrency. There was no discussion, no clarity, no stakeholders have been taken on board, especially about the risks involved – just a sudden government announcement of the deal [with World Liberty Financial],” former Pakistan Finance Minister Salman Shah told The Diplomat.
Shah believes that the move toward a deregulated digital currency cannot work in a heavily centralized economy. “First, you need to deregulate the economy, and undo the overreaching influence of the government, whose own size and expenses need to be considerably reduced,” he argued. “Second, a major overhaul is needed in tax policies. Once the fundamentals are readdressed, only then can we properly digitize the economy.”
Observers have regularly criticized the Pakistani state’s disregard for the more evident economic priorities, and continued shelving of much-needed fiscal reforms, which have kept the country in a vicious cycle of IMF bailouts.
The military, which is Pakistan’s primary source of financial misappropriation and the root of the country’s lopsided economy, continues to maintain its totalitarian rule over the country. This raises questions about the neutrality and durability of any financial decisions, let alone one founded on the very idea of deregulation.
The government, however, maintains that its planned digital finance overhaul is crucial to reforming Pakistan’s economy and addressing these structural shortcomings. The government argues that embracing crypto would bolster transparency, increase financial inclusion, attract foreign investments, and enhance fiscal growth.
Supporters underline digital currencies’ utility as a parallel investment mode that can counter a volatile domestic currency. Stablecoins are seen as especially potent with regard to forming a connection with the global digital economy, all the while protecting the value of one’s financial capital. Blockchain tech can streamline remittances, which contribute around 10 percent to Pakistan’s economy.
“Embracing open, neutral, and permissionless blockchain networks offers Pakistan a significant opportunity to leapfrog legacy systems and catch up with the global fintech frontier,” said Christian Cataliani, founder of the MIT Cryptoeconomics Lab. If implemented accordingly, the primary impact of a deregulated network is the creation of lower-cost financial infrastructure for citizens and businesses. This not only enhances domestic efficiency, but also enables interoperability with global markets, best exemplified by the mainstreaming of stablecoins in the international money movement.
“To maximize this upside, adoption must be thoughtful and focused on networks with a proven history of decentralization and neutrality,” added Cataliani.
Despite the previous ban, Pakistan currently ranks third in the Global Crypto Adoption Index. As things stand, Pakistanis purchase crypto using peer-to-peer markets, but keep their virtual currencies in digital wallets overseas. It is this market – believed to be worth $30 billion, and projected to rise to $300 billion in the coming years – that the Pakistani state is offering, and the global crypto firms are eyeing.
“The real value [for Pakistan] lies in foundational infrastructure: efficient money movement – both domestically and across borders – and savings technology that allows individuals to protect and utilize their wealth. The focus must be on ‘crypto as a rail for finance’ rather than ‘crypto as a casino,’” Catalani told The Diplomat.
The first step for Pakistan would be to create a regulatory framework that can separate the good actors from the bad ones. “Excellent templates already exist in the U.S., EU, Singapore, and Switzerland that can be adapted,” said Catalani, adding that adoption must start by solving real problems for consumers and businesses without tying the country to any specific provider, stablecoin, or blockchain network. “The massive advantage of crypto is its ability to break down the walled gardens of traditional finance – implementation should ensure those walls aren’t simply rebuilt with new technology.”
The obvious fear is that Pakistan is unlikely to take those walls down, and would continue to have a skewed narrative on “good” and “bad” actors.
There’s an even more basic problem: Pakistan currently lacks the basic infrastructure to incorporate crypto. Islamabad has announced an allocation of 2,000 megawatts of electricity for bitcoin mining and AI data centers, even as the country struggles to provide basic power supply. Already, Pakistan has an energy shortfall of almost 4,000 MW.
Even the IMF, whose bailout programs Islamabad repeatedly relies on to dodge bankruptcy, has questioned the country’s rushed crypto adoption plans. So why the crypto push?
It’s notable that Pakistan is also seeking crypto deals with Middle Eastern firms, including those from Saudi Arabia, which continues to expect Pakistan’s dutiful compliance in the region. Pakistan has a tradition of serving the royal families of Gulf monarchies to the detriment of its own national interests; Pakistani government policy now appears to be directly benefiting the First Family of the United States as well. The WLF is getting the world’s fifth-largest populous state as the target audience for crypto, amid concerns that speculation could rule the domain, with a dollar-pegged stablecoin USD1 being explored for cross-border payments.
Shah criticized what he sees as Pakistan’s tilt toward the U.S. at the expense of China. “It is the same with critical minerals, where we appear to be increasingly reaching out to America as well. The U.S. itself is looking for investment in these fields. It is China that has the investment and the technology that can help bolster Pakistan’s economy,” he said.
Crypto adoption without the needed checks could result in an outcome that is the exact opposite of the government’s stated intent of preventing capital flight. Crypto could become the most convenient pathway for money laundering, which – in tandem with Pakistan’s struggles in curbing terror financing – could significantly damage both the country’s economy and the fast-deteriorating security.
“A comprehensive regulatory framework that aligns with the FATF [Financial Action Task Force] guidelines and Pakistan’s AML [anti-money laundering] and CTF [counter-terrorism financing] laws can address many of the concerns [against crypto adoption], particularly those related to illicit financial transactions,” noted Basit Shafiq, an associate professor at the Lahore University of Management Sciences who specializes in blockchain technologies.
As per the guidelines issued by the FATF for Virtual Asset Service Providers (VASPs), all countries need to treat cryptocurrencies and other blockchain-based digital assets the same as other financial institutions as part of their AML and CTF efforts. This requires a similar licensing, registering, and monitoring of VASPs, along with data maintenance and accessibility. The FATF instructions focus on the traceability of all transactions. “Within such a framework, appropriate technological solutions and controls can be designed and deployed to enhance transparency, monitoring, and enforcement,” said Basit.
Given Pakistan’s struggles in preventing terror-financing through traditional means, and the military establishment’s continued patronage for certain jihadist outfits, there are natural doubts that the state would choose blockchain technology to initiate any reversal of its erstwhile policies. The fears, therefore, are ominous that Pakistan’s experimentation in the digital finance realm will serve only foreign powers – and the short-term interests of the country’s autocratic leaders.
Whatever role Pakistan plays in Gaza and Iran is being determined by powerful families in Washington and Riyadh, and not by the people of Pakistan, whose will continues to be suppressed by their all-encompassing army and its political machinations. The modes of payment might have evolved in line with new financial technologies, but it is the people of Pakistan who would continue paying the price.
