In a significant policy shift from its previous ban on cryptocurrencies, the current government is adopting a strict regulatory framework that includes anti-money laundering (AML) and counter-terrorism financing (CTF) measures to protect investors.

The proposed Virtual Assets Bill 2025 aims to create a National Virtual Assets Regulatory Commission to oversee licensing, compliance, and enforcement related to cryptocurrencies.

This move to legalize cryptocurrency also addresses concerns about money laundering and criminal activities, as highlighted by warnings from the Financial Action Task Force (FATF) regarding insufficient oversight.

Economic instability in Pakistan, characterized by 29% inflation and a fluctuating currency, underscores the urgency of establishing a well-regulated crypto landscape to mitigate financial volatility.

Key objectives of the Pakistan Crypto Council include establishing regulatory guidelines, ensuring investor protection, and promoting blockchain innovation, while also collaborating with international organizations.

The government is seeking insights from the UAE's regulatory framework and is engaging with Nigeria and Turkiye to develop effective cryptocurrency regulations.

Additionally, the State Bank of Pakistan plans to introduce a central bank digital currency (CBDC) by late 2025 to enhance digital payments and financial inclusion.

The International Monetary Fund (IMF) has urged Pakistan to tax crypto gains to help manage its debts, following a $7 billion bailout package approved in September 2024.

Historically, Pakistan's government has had a fluctuating stance on cryptocurrency regulation, with previous bans due to concerns over potential illegal activities and investor protections.

The country's youthful demographic, with 60% of its population under 30, presents a promising market for digital assets.

Pakistan is moving towards legalizing cryptocurrency trading as part of a strategy to attract international investment and integrate blockchain technology into its economy, according to Bilal bin Saqib, CEO of the Pakistan Crypto Council.

Blockchain technology is already being utilized in various sectors in Pakistan, such as land record digitization and charity systems, to improve transparency and reduce fraud.