Finance Minister Muhammad Aurangzeb has raised concerns over the growing volume of unregulated digital transactions in Pakistan, warning that such activities pose a serious risk of pushing the country back into the grey list of the Financial Action Task Force (FATF). Speaking at the Leadership Summit on Blockchain and Digital Assets: Technology and Innovation, Aurangzeb emphasized that roughly 15 percent of Pakistan’s population, particularly young people, are engaged in digital transactions and businesses without proper oversight. He cautioned that if left unchecked, this trend could invite international sanctions, undermining Pakistan’s hard-won exit from the grey list after six difficult years. The minister stressed that greater transparency and compliance with anti-money laundering and know your customer (KYC) requirements are critical to safeguarding the country’s financial standing.
Aurangzeb’s remarks come just ahead of the inaugural meeting of the Pakistan Virtual Assets Regulatory Authority (PVARA), scheduled for Monday. The newly established authority is tasked with creating a structured regulatory framework for digital assets and services. Under the Virtual Assets Ordinance, which was promulgated a few weeks ago, PVARA has been given the mandate to license, regulate, and supervise all entities dealing in virtual assets in Pakistan. The ordinance allows for a regulatory sandbox to encourage innovation while ensuring compliance and financial integrity. However, the law is based on ad-hoc legislation, which will expire in four months unless extended by Parliament. To provide permanency, both houses must pass the PVARA Act. Aurangzeb noted that parliamentary standing committees will begin deliberating the ordinance next week, signaling the government’s commitment to formalizing this new regulatory landscape.
The finance minister underscored that while digital transactions remain illegal in Pakistan pending federal cabinet approval, amendments to legalize digital currencies are under review. Prime Minister Shehbaz Sharif has already constituted a committee to examine the proposals, including the controversial suggestion of allowing dual nationals to serve as deputy governors of the central bank. Aurangzeb highlighted the importance of moving forward decisively, pointing out that the global financial system is rapidly adopting blockchain, cryptocurrency, artificial intelligence (AI), and Web 3.0 technologies. He argued that Pakistan should leverage international collaborations and knowledge transfers to fast-track its adoption of these tools, rather than starting from scratch, in order to stay competitive in the evolving digital economy.
Aurangzeb further explained that regulating digital assets carries both defensive and offensive dimensions: protecting the economy from illicit financial flows and sanctions, while also creating opportunities for economic growth and innovation. He acknowledged the momentum in Pakistan’s digital space, with over 25 million people participating in digital businesses, and stressed that this energy must be channeled responsibly. He reiterated that technology’s promise lies in being faster, cheaper, and more efficient, and that if blockchain, AI, and crypto can deliver these benefits for Pakistan, then it is in the national interest to regulate and support their adoption. At the same time, he reaffirmed the ministry’s readiness to facilitate this transition, ensuring compliance with global standards while enabling innovation.
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