By the STAIKOU DIMITRA

(FREELANCE JOURNALIST , PROFESSIONAL WRITER ABOUT INDIA,PAKISTAN,BANGLADESH
,CHINA AND MIDDLE EAST IN GREEK AND INTERNATIONAL PRESS)

The answer to this question is provided by the reality of cryptocurrencies in Pakistan. The Pakistan Cryptocurrency Council (PCC), launched in March 2025, was touted as a leap towards modernization under the guidance of the country’s Ministry of Finance. Among its most impressive initiatives were the creation of a strategic bitcoin reserve and the allocation of 2,000 megabytes of surplus electricity for crypto mining. These moves reflect a wave of modernism, very different from Pakistan’s historically cautious attitude. However, some critics began to sound the alarm when these reforms were made in the country.

The council also proposed the establishment of the Pakistan Virtual Asset Regulatory Authority (PVARA), a new supervisory body whose ostensible objective is to regulate the digital finance sector. But things did not remain clear for long as the council appointed Chungping Jao ,a Chinese-Canadian businessman and founder of Binance, known as CZ, who in November 2023 resigned as CEO of Binance ,following an agreement with the US authorities . He admitted that Binance did not comply with US anti-money laundering regulations and agreed that Binance should pay about $4.3 billion. CZ is considered one of the most controversial figures in the cryptocurrency world as he aggressively promoted Binance and contributed to the massive proliferation of cryptocurrencies ,was accused of opaque practices and the use of offshore structures .Nevertheless, he remains very popular in the crypto world due to his expertise and communication skills.

The selection of this man to the board of Pakistan’s Virtual Asset Regulatory Authority (PVARA) reveals Pakistan’s dismal track record in terms of its weakness in money laundering and terrorist financing. If not carefully scrutinized, the appointment of Chandpeg Jao risks altering institutional transparency and systemic corruption in an already fragile economic environment.

What makes this particular move by Pakistan all the more worrying is the speed and unilateral nature with which it was executed. Until recently, Pakistan’s position on cryptocurrencies has been consistently prohibitive. The State Bank of Pakistan (SBP) has issued repeated warnings against the use and promotion of digital currencies such as bitcoin. In 2018, the central bank formally banned all financial institutions from dealing in cryptocurrencies, citing risks of money laundering, terrorist financing and loss of monetary control. These concerns were not merely speculative; they reflected legitimate concerns in a country that had only recently, in 2022, been removed from the Financial Action Task Force (FATF) grey list after years of international pressure to improve its financial oversight systems.

Last month, Pakistan’s Finance Minister Imdadullah Bosal claimed that although a crypto board was set up to explore the policy on digital assets, the central bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP) banned cryptocurrency transactions. He added that a formal legal framework will only come into effect when the government decides to legalise cryptocurrencies, a step that has yet to receive parliamentary approval. For years, central bank officials have publicly reiterated that cryptocurrencies should not be legalized in Pakistan, noting that they pose a significant threat to the country’s financial integrity and macroeconomic stability.

Despite these restrictions, the federal government under the leadership of Prime Minister Sebaz Sharif created the Pakistani Cryptocurrency Council ( PCC) and appointed Bilal bin Saqib as special assistant for blockchain and cryptocurrency in the capacity of deputy minister. Sources said he had the full support of army chief Syed Asim Munir.

Experts warn that a state crypto reserve, run outside parliamentary oversight and traditional control, resembles a shadowy sovereign wealth fund ripe for patronage and covert political funding in Pakistan. Moreover, the new regulatory body, PVARA, has no legislative mandate, public accountability or institutional checks and balances. Without proper parliamentary approval or an institutional framework, PVARA’s existence and authority is tenuous at best. It is a troubling example of institutional circumvention, where a politically motivated initiative bypasses the judgment of financial technocrats and regulatory institutions.

Moreover, the policy of the energy side is particularly worrying. The diversion of 2,000 MW – equivalent to a week’s worth of industrial use – to mining and AI centres is highlighted as a regulatory and structural faux pas, given Pakistan’s fragile and indebted power grid. This massive diversion of energy resources raises questions about transparency, efficiency and equity within the country. What criteria will determine the recipients of subsidised energy? And what mechanisms are in place to prevent this from becoming yet another avenue for rent-seeking and crony capitalism? Pakistan’s energy sector is already under tremendous strain, with recurring energy shortages and crippling cyclical debt. Diverting precious resources to speculative ventures without public consultation or cost-benefit analysis is a risk that the country cannot afford at the moment.

It also shows that this trend is driven more by American influence than by a realistic approach to the economic reality of the country. Local voices in Pakistan describe the council and its crypto agenda as a public relations initiative explicitly aimed at restoring Pakistan’s international image. Shakib has also admitted that the council “has the primary objective of correcting the country’s global image”, underlining that Pakistan perceives cryptocurrencies as a policy of distorted optics rather than meaningful reform. Moreover, there may be potential conflicts of interest involving Pakistan’s cooperation with Ward Liberty Financial Inc (a Trump family crypto company), causing geopolitical confrontations.

The crypto council proceeding without adequate legal authority, oversight, or technical infrastructure reveals Pakistan’s limited regulatory capacity and may create new channels for money laundering and terrorist financing. Even global organizations such as the IMF and the FATF are said to have pointed out Pakistan’s abrupt shift and the need for much stronger safeguards for the legitimization of proceeds from illegal activities before any substantial progress.

Without genuine transparency, oversight, and institutional support, Pakistan risks exchanging one form of opacity for another. The apparent effort for digital modernization could thus backfire, potentially turning into a Trojan horse for the enrichment of the elite, fiscal mismanagement, and the degradation of the country’s credibility.