SBP Blocks Immediate Legalization of Cryptocurrency in Pakistan

Islamabad: The State Bank of Pakistan (SBP) has rejected a proposal to grant immediate legal status to digital currencies, warning that unregulated use of cryptocurrencies could trigger serious economic and legal challenges for the country.

The matter was discussed during the first meeting of the Pakistan Virtual Assets Regulatory Authority (PVARA), held on Monday under the chairmanship of Special Assistant to the Prime Minister on Blockchain and Crypto, Bilal bin Saqib. Finance Minister Muhammad Aurangzeb also attended as a special invitee, alongside the SBP governor, senior federal secretaries, and heads of key financial and regulatory bodies including the SECP, FBR, and NCCIA.

SBP Maintains Caution on Cryptocurrency

According to sources, the SBP opposed the withdrawal of its 2018 ban on virtual assets, arguing that approving crypto transactions without a structured legal and licensing framework could jeopardize financial stability.

The 2018 SBP circular (BPRD No. 3) had directed banks and financial institutions to refrain from dealing in virtual currencies such as Bitcoin, Litecoin, and ICO tokens. It further classified such transactions as suspicious, requiring banks to report them to the Financial Monitoring Unit (FMU). The directive also prohibited banks, microfinance institutions, and payment service providers from holding, promoting, or investing in cryptocurrencies.

Licensing & Regulation Framework Under Development

Participants at the meeting agreed that a comprehensive licensing regime for virtual assets is essential before lifting the ban. Under ad-hoc legislation, only licensed entities will be allowed to provide crypto-related services in Pakistan.

The upcoming framework is expected to cover company incorporation, compliance systems, operational capacity, and strict reporting obligations. Officials estimated that it may take six to eight months to establish the full regulatory structure.

FATF Concerns and International Scrutiny

Finance Minister Aurangzeb cautioned that unregulated digital transactions could push Pakistan back onto the FATF grey list, as nearly 15% of the population (over 25 million people) is engaged in digital businesses, including crypto-related activities.

“If transactions at this scale continue without oversight, it is only a matter of time before Pakistan faces global scrutiny again,” he warned.

Steps Taken by PVARA

During the session, the board approved:

• Creation of a crypto complaint portal in collaboration with the NCCIA.

• Alignment of regulations with global AML/CFT standards.

• Formation of committees on taxation, sandbox testing, regulatory drafting, and international cooperation.

• Consultation on a draft licensing framework to be finalized soon.

The authority also decided to hold bi-monthly meetings over the next six months to ensure continuous stakeholder engagement.

Balancing Innovation with Financial Integrity

PVARA Chairman Bilal bin Saqib emphasized the importance of building trust while encouraging innovation in the crypto space.

“Our mission is to protect Pakistan’s financial system while creating opportunities for investment and growth in the virtual assets economy. By doing so, we aim to enhance Pakistan’s global reputation as a forward-thinking player in the digital financial sector,” he said.