Bitcoin Adoption in Pakistan Continues to Rise Without Regulatory Clarity

Pakistan’s Emerging Bitcoin Adoption Continues to Rise Amid Regulatory Uncertainty

Pakistan, a country with a population of approximately 250 million and a majority living below the poverty line, is emerging as one of the key markets in Southeast Asia. Despite political chaos and a tumbling financial situation, many Pakistanis remain hopeful for a brighter future in 2023. The Karachi Stock Exchange (KSE) has recently reached historical all-time highs, indicating a positive shift in the overall situation.

In November, “Bitcoin Pakistan,” a community of like-minded technology and bitcoin enthusiasts, organized its first physical networking event in Lahore. The event showcased the growing interest in understanding bitcoin as an inflation hedge tool and a global payments network. However, due to concerns about the legality of cryptocurrency, many individuals in Pakistan are reluctant to publicly discuss it, fearing consequences from the authorities. There is a common misconception that bitcoin is banned or illegal in the country.

Comparisons can be drawn with the Central Bank of Nigeria, which imposed a ban on cryptocurrency transactions through banks in 2021. However, after witnessing the increased demand for bitcoin and its usage in the country, the Central Bank of Nigeria lifted the ban in its latest circular, providing clear instructions. The bank stated the need to regulate the activities of virtual asset service providers (VASPs), including cryptocurrencies and crypto assets.

In contrast, the State Bank of Pakistan issued a circular in 2018 cautioning the public that cryptocurrencies are not legal tender, issued, or guaranteed by the Government of Pakistan. The bank clarified that it does not authorize or license any individual or entity for the issuance, sale, purchase, exchange, or investment in any virtual currencies. Regulated entities were advised to refrain from processing, using, trading, holding, transferring value, promoting, and investing in virtual currencies.

Despite the lack of regulatory clarity, bitcoin adoption has significantly increased in Pakistan. Peer-to-peer services like Binance, Paxful, and other over-the-counter trade methods are commonly used to acquire bitcoin in the country. While the exact number is unknown, Pakistan appears to be among the top countries in terms of bitcoin adoption rate in emerging markets.

The rapid adoption of bitcoin in Pakistan can be attributed to the country’s high inflation rate, which has exceeded 25% annually. This inflation has worsened in recent years due to political chaos and pressure from the International Monetary Fund (IMF). The freelancing industry in Pakistan is thriving, with the country being one of the top exporters of IT services. Freelancers have increasingly turned to storing their wealth in foreign currencies such as USD or GBP, and the number of freelancers holding bitcoin or USDT as an inflation hedge has risen significantly since the COVID-19 crisis.

Bitcoin is seen as a revolution that cannot be stopped, and many countries have recognized its potential and are working on regulations to keep up with the innovation in the digital world. With friendly regulations from the government and a strict crackdown on crypto frauds, Pakistan could open doors to new opportunities and attract significant investments that could help alleviate the country’s debt crisis.

In conclusion, Pakistan’s emerging market status and the increasing adoption of bitcoin highlight the country’s potential for growth and development. However, the lack of regulatory clarity surrounding cryptocurrency poses challenges and uncertainties for both individuals and businesses. It remains to be seen how the Pakistani government will address these concerns and create a conducive environment for the cryptocurrency industry to thrive.