KARACHI: In a significant step towards embracing digital finance, Pakistan has initiated the development of a comprehensive regulatory framework for cryptocurrencies and virtual assets. The move marks the country’s most serious attempt yet to bring its growing digital asset ecosystem under formal oversight.

The process began during a high-level meeting of the Pakistan Crypto Council (PCC) in Islamabad, chaired by Finance Minister Muhammad Aurangzeb. The gathering brought together senior figures from key regulatory and policy bodies, including virtual attendance by the Governor of the State Bank of Pakistan (SBP) and Bilal Bin Saqib, the Minister of State and Special Assistant to the Prime Minister on Blockchain and Crypto, who also heads the PCC.

In-person participants included the chairperson of the Securities and Exchange Commission of Pakistan (SECP) and officials from the Law and IT ministries. Discussions centered on crafting a regulatory system that is secure, transparent, and encourages innovation, while ensuring investor protection and financial stability.

A dedicated technical committee has been formed to lead the drafting process. The group — composed of representatives from the SBP, SECP, the Law Division, and the IT and Telecom Division — has been tasked with developing a regulatory framework addressing licensing, compliance, innovation, and governance standards for digital asset transactions.

This initiative reflects Pakistan’s alignment with a global trend toward regulating cryptocurrencies. It follows recent developments, including the announcement of the country’s first government-backed Strategic Bitcoin Reserve and the creation of a national Bitcoin wallet.

Currently, cryptocurrencies operate in a legal grey area in Pakistan. Though not explicitly outlawed, they lack a defined regulatory status. A recent clarification by the SBP stated that digital assets are not banned but advised regulated financial institutions to refrain from dealing in them until proper legal protections are in place.

Despite this, conflicting signals remain. The government previously told the National Assembly’s Standing Committee on Finance that cryptocurrencies are banned, and warned that individuals engaged in crypto activities could be investigated by the Financial Monitoring Unit (FMU) and the Federal Investigation Agency (FIA).

Finance Minister Aurangzeb stressed the importance of a forward-thinking regulatory environment that balances investor protection with innovation. “We must build a system that not only supports transparency and inclusion but is also resilient enough to integrate emerging technologies into our financial structure,” he said.

Still, challenges lie ahead. During a recent meeting of the Senate Standing Committee on Information Technology and Telecommunication, lawmakers raised concerns about the legitimacy of the Pakistan Crypto Council itself. Some questioned whether it could legally be formed through an executive order without parliamentary approval. The Ministry of IT clarified that its role had been limited to providing input on the council’s terms of reference.

Several senators argued that the PCC should be placed under the jurisdiction of the Ministry of IT rather than the Finance Division, suggesting that broader consultation is needed as Pakistan ventures into the complex realm of digital finance.

As the country moves closer to formalizing crypto regulations, stakeholders hope that a balanced approach will allow Pakistan to harness the potential of digital assets without compromising its financial integrity.