Crypto Currency… Informal to Formal?

The establishment of the Crypto Council has been implemented in Pakistan. The Pakistan Crypto Council, established through an executive order by Prime Minister Shahbaz Sharif, is headed by CEO Bilal bin Saqib, who has also been appointed as the Prime Minister’s Special Assistant on Block chain and Crypto currency. His position is equivalent to that of a Minister of State.

The objectives of the Pakistan Crypto Council include the formulation of laws and regulations related to crypto currency, promotion of block chain technology, and digital assets. The Pakistan Crypto Council will verify Bit coin wallets existing in the country through block chain technology, and the verified Bit coins will be added to the National Bit coin Reserve.

Before the formal launch of crypto currency in Pakistan, there is an urgent need to make it safe and transparent. According to the CEO of the Pakistan Crypto Council, this initiative can promote investment in the country; however, special attention must be paid to ensure that crypto currency is not used for money laundering, illegal payments, or other suspicious transactions.

Pakistan has already faced the Financial Action Task Force (FATF) grey list, so before the formal launch of crypto currency, rules and regulations must be developed in accordance with FATF and Pakistan’s regulatory framework.

Crypto currency is essentially a digital or virtual currency protected by cryptography. Cryptography is a process that secures communications through coded algorithms and others, making the transaction messages in crypto currency incomprehensible to unauthorized parties. Crypto currency can be used for online transactions, investment, cross-border payments, etc.

Some of the world’s well-known crypto currencies include Bit coin (BTC), Lite coin (LTC), Ethereum (ETH, Dogecoin (DOGE), and Ripple (XRP). Transactions via crypto currency are recorded on a public ledger called block chain, which not only secures the transactions but also verifies them. However, unlike currency notes, crypto currency is not controlled by any government or financial institution. Currency notes are protected by the central banks of their respective countries, which is why the crypto currency market can be volatile at any time. Therefore, it is extremely important to research and understand the risks before investing.

Currently, the global crypto currency market size is reported to be over 3 trillion dollars, with more than 600 million people owning crypto wallets. In over 100 countries worldwide, crypto currency transactions are legal. Bit coin is considered the most well-known crypto currency in the world, and currently, the value of one Bit coin exceeds 100,000 US dollars, though it remains subject to fluctuations. Just five years ago, in early 2020, the price of one Bitcoin was at the level of only 7,000 US dollars. When trading in crypto currencies, special attention must be paid to the fact that prices in this market can fluctuate extremely rapidly, increasing or decreasing sharply based on market conditions.

The crypto currency market is rapidly developing in Pakistan, largely due to the young population, which is quickly adopting digital assets. Despite the government’s announcement to establish the Pakistan Crypto Council, the formulation of rules and regulations in this regard is necessary. In this context, the role of the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP) is crucial.

On May 30, 2025, the State Bank issued a clarifying statement regarding the legal status of virtual assets in the country. It stated that in 2018, the SBP had instructed banks, development finance institutions, microfinance banks, electronic money institutions, payment system operators, payment service providers, and exchange companies to avoid dealing in virtual assets. These instructions were not because virtual assets were declared illegal in the country, but because there was no existing legal or regulatory framework for these assets.

The State Bank and the Ministry of Finance are currently working with the Pakistan Crypto Council, established by the federal government, to develop an appropriate legal and regulatory framework for virtual assets in the country. The State Bank believes that a legal and regulatory framework will provide the necessary clarity and legal protection regarding virtual assets, ensuring the protection of users and investors.

With the formation of the Pakistan Crypto Council, the government has announced the allocation of over 2,000 megawatts of electricity for Bit coin mining and AI data centers. However, the IMF has expressed concerns over this decision and raised a red flag. The IMF’s objection is that Pakistan’s energy sector is already burdened with circular debt and other issues, and allocating 2,000 megawatts of electricity to a new project will further increase the financial problems of this sector. The IMF has also raised questions regarding the rates and distribution of electricity allocated for Bit coin mining.

It is worth noting that Bit coin mining is the process of verifying transactions on the Bit coin network and adding them to a public ledger called the block chain. This process uses powerful computers that help secure the network and verify transactions. In Bit coin mining, miners collect unverified transactions and verify them, forming a “block.” Then, using computational power, these transactions are confirmed, and the verified block is added to the block chain. Miners are rewarded with new Bit coins (blocks) as fees, and thus the block chain process continues.

According to IT expert Kanwal Cheema, the amount of electricity required worldwide for Bit coin mining sometimes equals the needs of small countries. If mining is done individually at home, a single mining rig (ASIC miner) can consume between 1,200 to 3,000 watts daily, which is equivalent to an air conditioner. On an industrial scale, large mining farms use electricity in megawatts, and in some cases, a single farm can consume 50 megawatts or more.

In a country like Pakistan, where electricity rates are high and electricity is generated from coal or oil, the adverse environmental impacts could pose obstacles to this project. These concerns have also been echoed by the IMF.

In 2021, Pakistan ranked third in the Global Crypto Adoption Index, with approximately over 4 million people involved in crypto currency transactions, including a large number of young individuals. With the establishment of the Pakistan Crypto Council and under the Virtual Assets Regulation Act 2025, crypto currency is now recognized as a legal asset in Pakistan. Potentially, the State Bank of Pakistan and the Securities and Exchange Commission will oversee the crypto market. Crypto exchanges will be required to obtain a license from the SECP, and companies working with crypto assets must be registered with the relevant authorities.

Currently, in Pakistan, crypto currency is being bought and sold through peer-to-peer platforms, international exchanges, or local exchanges such as Exchangeer. Crypto currency provides benefits such as online transactions, investment opportunities, cross-border payments, protection from inflation and government interference, financial services for unbanked individuals, and time savings. However, along with these benefits, the absence of rules and regulations exposes investors in this market to risks.

Pakistan is included among the prominent countries adopting crypto currency, and the introduction of laws and a regulatory framework could further promote the growth of crypto currency in the country.

The writer is a senior journalist and can be reach at khi.reporter@gmail.com