Pakistan proposes compliance-based crypto regulatory framework - Report

Pakistan has recently proposed a compliance-based regulatory framework for cryptocurrencies, marking a significant shift in its approach to digital assets. This move follows the establishment of the Pakistan Crypto Council, which aims to integrate blockchain technology and cryptocurrencies into the country's financial landscape.

The council was launched to regulate and integrate blockchain technology and digital assets into Pakistan's financial framework. It is a government-backed initiative that will formulate policies, foster innovation, and ensure a secure approach to crypto adoption.

The proposed regulatory framework is designed to align with the Financial Action Task Force (FATF) guidelines, focusing on Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations. This framework aims to strike a balance between technological advancement and national security imperatives.

Pakistan's shift towards embracing cryptocurrencies is a departure from its previous stance. In 2023, officials called for a ban on digital assets due to concerns about circumventing FATF regulations. However, recent developments indicate a more favorable attitude towards digital assets.

The Federal Investigation Agency (FIA) has unveiled a comprehensive policy to regulate virtual assets and virtual asset service providers (VASPs). This policy will undergo stakeholder review and legislative approval, with phased implementation planned for 2026.

The Pakistan Crypto Council is exploring collaborations with international entities, including the appointment of Binance co-founder Changpeng Zhao as a crypto adviser. This move is part of efforts to attract foreign investment and turn Pakistan into a hub for crypto.

The new framework aims to integrate Pakistan into the global digital economy, fostering innovation while ensuring compliance with international standards.

By establishing clear regulations, Pakistan seeks to attract foreign investment and capitalize on its young, tech-savvy population to drive growth in the digital finance sector.

The emphasis on AML and CTF regulations ensures that the growth of the crypto sector is balanced with national security priorities.

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