Editorial
Cryptocurrency has quietly become a financial refuge for millions of Pakistanis as inflation rises, the rupee weakens, and capital controls tighten. Despite this dramatic shift in public behaviour, the state remains unable to offer a stable legal framework. Pakistan’s shrinking purchasing power, limited reserves, and dependence on remittances have accelerated grassroots crypto adoption, yet policymaking continues to lag behind. The 2025 Global Crypto Adoption Index now ranks Pakistan third in the world, showing how deeply digital assets have entered everyday financial life. But this vacuum in regulation expands economic vulnerabilities, encourages illicit finance, and deepens public distrust in institutions.
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The absence of enforceable rules has discouraged legitimate exchanges, fintech firms, and remittance platforms from scaling operations in Pakistan. As a result, potential investment, jobs, and tax revenue are lost. Much of the activity has instead shifted to unregulated peer-to-peer markets and offshore platforms. Experts warn that large sums may now be circulating through informal channels, beyond monitoring or supervision. What could have been an engine of innovation has turned into a parallel opaque ecosystem that weakens economic oversight and amplifies instability.
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Macroeconomic pressures are pushing more citizens toward crypto as a defensive shield rather than speculation. A devalued rupee, rising inflation, and erosion of savings have driven people to seek alternatives outside the banking system. Yet most of this activity occurs without consumer protection or legal safety nets. Many users remain outside formal finance and become vulnerable to fraud, scams, and systemic risks. Confusion deepens because Pakistan’s laws—designed long before digital finance—do not classify crypto as security, commodity, or property.
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The government’s Virtual Assets Ordinance 2025 attempted to provide direction but remains temporary and weak. Limited consultation, lack of expertise, and institutional turf battles have left the regulatory environment uncertain. Pakistan now urgently needs a clear and enforceable framework that defines digital assets, licenses service providers, embeds strict AML procedures, and integrates crypto flows into macroeconomic planning. Delay will only push more activity into a hidden financial system that the state cannot monitor or control.
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