No ban on cryptocurrencies, clarifies SBP

The State Bank of Pakistan (SBP) clarified that it has never declared virtual assets (VAs), including cryptocurrencies as illegal.

In a press release issued by the central bank, the SBP stated that the advisory directed banks, microfinance institutions, development finance institutions (DFIs), electronic money institutions (EMIs), and other financial service providers to refrain from dealing in VAs purely as a precautionary measure.

“The advisory was issued solely to protect our regulated entities and their customers, not because VAs were declared illegal,” the central bank stated.

The clarification comes in the wake of a recent briefing to the National Assembly's Standing Committee on Finance, during which it was suggested that the trading and holding of cryptocurrencies remain illegal in Pakistan. The committee was told that entities involved in crypto-related activities are required to report such transactions to the Financial Monitoring Unit (FMU), which then forwards cases to the Federal Investigation Agency (FIA) for further probe.

SBP Executive Director Sohail Jawad, while addressing the committee, confirmed that the 2018 directive remains in force. However, the central bank clarified that it is currently working in coordination with the Finance Division and the recently formed Pakistan Crypto Council (PCC) to design a comprehensive regulatory and legal framework for cryptocurrencies in the country.

The SBP noted that the establishment of a formal framework will help bring clarity to the legal status of digital assets in Pakistan, while also ensuring adequate investor protection and consumer safeguards.

Despite the SBP's clarification, Secretary Finance Imdad Ullah Bosal maintained during the same committee briefing that cryptocurrencies are currently banned in Pakistan. He added that those dealing in such assets may face investigation by relevant enforcement authorities, including the FMU and FIA.

Responding to a query by Committee Chairperson Nafisa Shah on why the PCC was established without consultation with parliament or the SBP, the finance secretary said the task force was created under the directives of Prime Minister Shehbaz Sharif via executive orders. He stressed that the PCC’s role is advisory in nature, aiming to propose a legal and procedural path forward.

During the session, committee member Mirza Ikhtiyar Baig questioned the government’s priorities, asking why the administration planned to allocate 2,000 megawatts (MW) of electricity to crypto mining and AI data centres, rather than supporting Pakistan’s local industries.

Earlier this month, the federal government announced a plan to allocate 2,000MW of electricity for Bitcoin mining and artificial intelligence (AI) data centres under a national initiative, sparking further debate about the country’s evolving crypto stance.

Pakistan currently ranks among the top ten countries in terms of cryptocurrency adoption and was previously placed third on the Global Crypto Adoption Index. With over 20 million active cryptocurrency users and more than $20 billion in digital asset transactions, the potential for crypto-based innovation remains high. The country also receives approximately $35 billion annually in remittances, a sector that could significantly benefit from blockchain-based financial solutions.

The Standing Committee on Finance is expected to summon the SBP, Securities and Exchange Commission of Pakistan (SECP), and members of the Pakistan Crypto Council in its next meeting to seek further clarity on the legal and economic implications of digital asset adoption.