Pakistan Plans Bitcoin Reserve but Government Says Crypto Still Banned at Home

Pakistan has announced plans for a state-backed Bitcoin Reserve at the Bitcoin Vegas 2025 Conference, led by Bilal Bin Saqib, the new Special Assistant to the Prime Minister. This proposal, however, clashes with the country’s existing ban on cryptocurrency, as government officials quickly reaffirmed that crypto transactions are illegal. Despite ambitions for digital finance, economists express concerns over the risks associated with investing public resources in speculative assets.

In a surprising twist at the Bitcoin Vegas 2025 Conference, Pakistan’s newly minted Special Assistant to the Prime Minister on Crypto and Blockchain, Bilal Bin Saqib, announced a plan for a state-backed Strategic Bitcoin Reserve. This declaration marks a bold, albeit symbolic, step toward Pakistan’s long-term engagement with decentralized finance. Saqib, who also heads the Pakistan Crypto Council, made this announcement in front of notable figures, including high-profile Americans like Vice President JD Vance and Eric Trump.

Saqib’s remarks revealed aspirations that align closely with former President Donald Trump’s pro-crypto stance. “We want to thank the US because we are getting inspired from them,” he stated, suggesting that the country is looking to draw on lessons and successes from abroad.

However, this optimistic vision stands starkly at odds with Pakistan’s domestic legal framework. Senior officials hurriedly reaffirmed that cryptocurrency trading remains illegal under current laws, casting doubt on Saqib’s ambitious plans. In a statement to the National Assembly’s Standing Committee, Finance Secretary Imdadullah Bosal made it clear: cryptocurrency is not legitimate money in Pakistan.

“There will be a legal framework only when the government formally takes a decision,” Bosal said, which essentially indicates that until any legislative changes are made, all crypto-related activities are still prohibited.

Saqib’s pitch included the ambitious proposal of a national bitcoin wallet, which he framed as a sovereign reserve holding digital assets “already in state custody.” He emphasized that these are not meant for speculation but as a commitment to digital finance. Additionally, to entice international investors, he laid out plans to allocate 2,000 megawatts of surplus electricity for bitcoin mining and AI data centers, calling it a new chapter for Pakistan in the digital realm.

In a statement full of hope, Saqib remarked, “Pakistan is no longer defined by its past. It is being reborn as a forward-looking hub of digital innovation.” He encouraged innovators to come to Pakistan and build something significant.

Concurrently, the Pakistan government is working on the newly established Pakistan Digital Assets Authority (PDAA) to oversee regulation and development in the crypto and blockchain sphere. The PDAA aims to create a framework that adheres to international standards, especially those set by the Financial Action Task Force (FATF), while also incorporating blockchain technology into various sectors of governance and finance.

Despite the government’s upbeat outlook on cryptocurrency as a pathway to digital investment and growth, many economists in Pakistan are sounding alarms. They view this pivot as risky, pointing out the speculative nature of crypto assets that could potentially endanger public funds.

Experts are wary of the proposed use of public foreign exchange reserves for crypto investments, comparing them to previous financial bubbles like those seen in 2008. The suggestion that part of these reserves could be used for such a volatile market raises serious concerns.

Moreover, the allocation of subsidized electricity for bitcoin mining has drawn critique. Many question why crypto miners would receive power at rates significantly lower than those paid by households, describing this arrangement as “puzzling and opaque.” Given that crypto markets remain speculative and mostly illiquid, there’s growing trepidation about their systemic risks and potential damages to the overall economy.

As Pakistan stands at the crossroads of traditional economies and emerging digital financial systems, the balance it tries to strike between innovation and safety will be closely watched.

In summary, Pakistan’s ambitious plan to establish a Strategic Bitcoin Reserve aims to project progress in the cryptocurrency realm, even as the domestic legal climate remains prohibitive. The government’s initiatives, underlined by the formation of the Pakistan Digital Assets Authority, may signify a willingness to engage with digital finance. However, economic analysts raise serious concerns over the speculative nature of cryptocurrencies and the potential risks involved, particularly given the allocation of public resources in such volatile assets. The tension between the government’s aspirations and the current reality illustrates the complex landscape Pakistan navigates as it contemplates its digital future.

Original Source: www.business-standard.com