Pakistan proposes regulation for cryptocurrency and CBDC

The State Bank of Pakistan (SBP) has introduced a regulatory framework that could recognize cryptocurrencies and central bank digital currencies (CBDCs) as legal tender.

In a meeting chaired by SBP Governor Jameel Ahmad, the Monetary Policy Committee (MPC) suggested policy amendments to allow state banks to issue digital currencies and establish penalties for unauthorized issuers.

If approved, the proposals would enable Pakistan to explore a digital rupee as a CBDC while allowing state banks to provide digital payment services, potentially supporting blockchain-based transactions, including cryptocurrency trading.

Previously, the MPC took a cautious approach to digital assets.

In May 2023, then Minister of State for Finance and Revenue, Aisha Ghaus Pasha, indicated potential moves to restrict cryptocurrency.

However, the policy direction shifted following the appointment of former Habib Bank Limited CEO Muhammad Aurangzeb in March 2024.

Alongside these regulatory proposals, the MPC announced a 2.5% reduction in interest rates on Nov. 4, citing lower food inflation, favorable oil prices, and stable gas tariffs.

The MPC projects economic growth between 2.5% and 3.5% for fiscal year 2025.

The regulatory framework aims to formalize digital asset trading in Pakistan, establishing a controlled environment for cryptocurrencies and digital currencies while implementing penalties for non-compliant exchanges.

If passed, the amendments would set a foundation for digital assets within the country’s financial system, supporting regulated growth in the sector.