Introduction
As with other regions of the globe, cryptocurrency (کرپٹوکرنسی) has also become popular in Pakistan. Its popularity has continually grown in the past couple of years with Pakistani investors, tech-savvy individuals, and even the common man showing interest in bitcoin and Ethereum among other digital currencies. However, the state of cryptocurrency in Pakistan is still at its infancy stage and comes with its own set of opportunities and challenges.
Growing Popularity of Crypto in Pakistan
Pakistan is one of the leading countries in crypto adoption. Reports claim that millions of people in Pakistan own some form of cryptocurrency despite the absence of proper regulations. A good number of youths are actively trading and buying crypto using Binance, Coinbase, and even local exchanges. Freelancers too, now prefer using cryptocurrency to receive payments from their clients abroad as opposed to the traditional banking system which takes forever to process payments.
Government,s Stance and Legal Framework
The SBP (State Bank of Pakistan) has yet to recognize cryptocurrencies as legal and issued a ban on any banking related crypto transactions in 2018. On the other hand, there has not been any formal law stating cryptocurrency is illegal either, which creates a legal void that while allowing trade, introduces some level of risk. There are some positive signs with the government showing intent toward regulation instead of an outright ban which gives hope to investors
Advantages
- Remittance payment: The employment of Cryptocurrencies can minimize the time and expenses incurred in sending remittances to Pakistan.
- Economic Inclusion: It can offer banking services to populations that do not have access to banking services, particularly in the farming regions.
- Youth Employment: New markets could be available through crypto trading, mining, and development of blockchain in the country.
- Innovation and Investment: The increasing number of blockchain companies within Pakistan would help to stimulate foreign investment.
Challenges and Risks
Lack of Knowledge: A larger part of population lacks understanding on how crypto operations work making them easy target.
Deficiency of Regulation: Having no guidelines poses risks of having ambiguous policies.
Frauds and Scams: A good number of people have fallen victim to Ponzi scams and fake cryptocurrency projects.
Market Volatility: There is inconsistent pricing of cryptocurrencies, which can lead to losses.