Pakistan witnessed a surge in cryptocurrency adoption in 2021, with the estimated value of crypto holdings reaching $20 billion according to a new report by the Federation of Pakistan Chamber of Commerce and Industry (FPCCI). This figure surpasses the country’s current federal reserves.
Despite a 2018 ban on cryptocurrencies as legal tender by the State Bank of Pakistan (SBP), interest in the digital asset class continues to rise. Pakistan ranked third globally in crypto adoption for the 2020-21 period, following India and Vietnam.
The FPCCI report attributes the crypto boom to factors like the COVID-19 pandemic, increased participation from retail investors, easy access to leverage, and lower transaction costs. It highlights Binance, headquartered in the Cayman Islands, as the leading crypto exchange used by Pakistani investors.
The report further reveals that two-thirds of Pakistani crypto investors rely on centralized services, while the remaining third utilize decentralized finance (DeFi) platforms. Notably, traditional payment methods like debit and credit cards are unavailable due to the SBP’s restrictions on financial institutions.
The report underscores the need for a national cryptocurrency strategy and a regulatory framework to manage this new financial ecosystem. This would safeguard investor interests and minimize potential vulnerabilities within the system.
The growing popularity of cryptocurrencies in Pakistan coincides with a resolution passed by the Khyber Pakhtunkhwa province in December 2020 legalizing crypto within its jurisdiction. However, the final decision on nationwide crypto legalization rests with the federal government.
With over 5,000 cryptocurrencies currently in circulation globally, Pakistan’s crypto market, while thriving unofficially, presents a complex scenario. The FPCCI’s report sheds light on the rising adoption and the need for a comprehensive regulatory framework to navigate this evolving financial landscape.
