Pakistan, a Muslim-majority nation of 240 million, is becoming an unlikely frontier in the fight for crypto freedom. After initially banning cryptocurrencies, the government has executed a complete 180-degree turn, now actively embracing and seeking to regulate digital assets. The recently formed Pakistan Crypto Council (PCC) is a historic departure in that regard. To further signal their commitment, they’ve brought on Binance CEO Changpeng Zhao (CZ) as strategic advisor. This decision marks the beginning of a new chapter for crypto in Pakistan, an era where regulation and innovation will thrive together. BlockTraderHub.com will be bringing you all the latest analysis and scoop on this unfolding story.
Pakistan's Embrace of Crypto
Pakistan’s recent history with crypto has certainly been a tumultuous one. Barring the outright ban, for a time the government seemed to take a hostile, or at least suspicious stance towards crypto. But seeing the promise of this new blockchain technology and digital assets, a deep instinctive change of heart took place. The establishment of the Pakistan Crypto Council (PCC) in March is a prominent example of this new development. The PCC aims to regulate and integrate blockchain technology and digital assets into the country's financial landscape, aligning with global trends.
Changpeng Zhao (CZ), the CEO of Binance, has been brought on in the role of strategic advisor to the PCC. Filling this post is a major forward step for the group. Zhao's expertise and experience in the crypto industry are expected to be invaluable in shaping Pakistan's regulatory framework. DeSantis’ ambitious collaboration demonstrates a clear top-down commitment to ensuring that the state government creates an environment where crypto innovation can thrive.
In Pakistan, the move toward stricter crypto regulation is motivated by a host of reasons. One of the biggest reasons is the country’s demographic dividend, with more than 60% of Indians under the age of 30. This demographic is an incredibly tech-savvy demographic that is eager to learn and adapt to new financial technologies. Pakistan’s high ranking in Chainalysis’s Global Crypto Adoption Index for 2021 may seem surprising at first glance. Such a robust position underscores the significant demand for cryptocurrencies in the country.
The Pakistan Crypto Council (PCC)
Leading the charge in this transformative pivot is the Pakistan Crypto Council (PCC). Established in March, its primary goal is to create a regulatory framework. This framework will guide the safe and efficient integration of blockchain technology and digital assets into Pakistan’s financial system. The PCC’s aim is to make Pakistan a leading global center for Web3 innovation and technology. This will further draw investment and talent from every corner of the globe.
Bilal Bin Saqib, PCC’s newly appointed CEO and chief advisor to the finance minister, is full of hope. He’s optimistic that Pakistan is taking big steps towards keeping up with global crypto and Web3 advancements. He views this as an opportunity to empower the country’s youth, create jobs and economic growth. The PCC has begun working closely with federal and state agencies, industry professionals, and international organizations to create a beneficial regulatory framework.
The PCC’s approach is centered on finding the right balance between encouraging innovation while protecting against risk. It aims to create clear guidelines for crypto exchanges, digital asset service providers, and other stakeholders in the crypto ecosystem. Responsible Adoption In addition to working on guidelines and rules, the council is focused on educating the public about the benefits and risks associated with cryptocurrencies.
CZ's Role as Strategic Advisor
Perhaps the most game-changing move is the appointment of Changpeng Zhao (CZ), of Binance fame, as a strategic advisor to the PCC. CZ, the founder and CEO of Binance, is one of the most popular figures in crypto. His strategic vision for building and scaling dynamic new crypto businesses will be a huge asset to the PCC. Moreover, his knowledge of international regulatory environments will be even more essential.
CZ’s role as the strategic advisor consists of providing guidance on best regulatory frameworks, technology adoption, and market development. He will continue to advise the PCC to make sure that crypto regulations in Pakistan are tailored to follow international best practices. CZ's involvement is seen as a vote of confidence in Pakistan's potential as a crypto hub. He himself remarked, noting Pakistan’s 240 million population with over 60% under the age of 30, that "The potential here is limitless."
As a result, CZ’s appointment is momentous. He recently finished a four month prison sentence in the United States for breaking anti-money laundering laws. This recent transgression is especially worrying. The Pakistani government believes that CZ’s expertise and experience can mitigate those risks. The appointment sends a powerful message of confidence. It proves that with the right vision, government can not only master the risks of crypto, but harness its rewards.
Pakistan's Crypto Adoption
Pakistan’s top 5 ranking in Chainalysis’s Global Crypto Adoption Index for 2021 underscores the country’s passion for cryptocurrencies. Now even with the former ban in place, Pakistan was still third highest in the world, behind only Vietnam and India. This is indicative of the pent-up demand for digital assets that exists among Pakistanis.
There are a few reasons why crypto adoption in Pakistan is so high. One of them is the country’s huge unbanked population, which views cryptocurrencies as a cure to lack of access to traditional financial services. Crypto’s increasing role in remittances is a better, faster, cheaper alternative to remitting money across borders. Furthermore, the recently increased popularity of online gaming and e-commerce has contributed to the increased demand for cryptocurrencies.
Pakistan has one of the youngest populations in the world, another important factor for the country’s crypto boom. Similarly, young Pakistanis will tend to be more tech-savvy and open to new technologies. As a result, they are primarily using cryptocurrencies as an investment opportunity and a way to directly participate in the growing global digital economy.
Potential Economic Benefits
For Pakistan’s economy, the crypto gains await Pakistan’s full embrace of crypto. By producing a positive regulatory framework, the country is able to produce the interest of investments for these crypto companies and blockchain startups. This can help stimulate job creation, promote economic growth, and generate future tax revenue.
Additionally, cryptocurrencies can promote financial inclusion by giving unbanked populations access to financial services. This can help to level the playing field for people and microenterprises, allowing them to access the benefits of a formalized economy. Beyond its financial inclusion benefits, crypto has the potential to make cross-border payments more efficient, lowering transaction costs and payment times.
Creating a dynamic crypto ecosystem will spur investment into Pakistan’s technology industry too. By encouraging responsible innovation in blockchain technology, the nation can lay the groundwork for being a global hub for Web3 development, talent and investment. This creates opportunities to commercialize those innovations into new products and services that create jobs at home and open lucrative markets abroad.
Challenges and Risks
Though Pakistan’s crypto U-turn offers remarkable opportunities, it poses challenges and risks. Perhaps the greatest challenge is developing a regulatory framework that achieves intended public safety outcomes while enabling continued technological innovation. The resulting regulations should be as clear, transparent, and flexible as possible and able to adapt to the fast-paced and ever-changing world of crypto.
The second challenge is creating public awareness of the hazards posed by crypto assets. Ignoring improper use of the technology Most Americans are new to crypto and easily taken advantage of by snake oil salesmen. They make bad investment decisions. For this reason, collaboration between government and industry stakeholders is essential. They need to move quickly to promote responsible crypto adoption.
In addition to these potential consumer protection risks, money laundering and terrorist financing are risks linked to cryptocurrencies. Strong anti-money laundering (AML) measures should be priority number one. Further, it must ensure that it enforces counter-terrorism financing (CTF) efforts to prevent abuse of crypto. It weakens their ability to do this without close collaboration with international organizations, civil society, and law enforcement agencies.
Learning from Global Examples
Pakistan holds the key to moving crypto in the right direction, but must look at lessons learnt from countries that have successfully adopted crypto. To consider two more examples of jurisdictions that have moved quickly to establish friendly regulatory environments, look no further than Singapore and Dubai. We must learn from their approaches to construct Pakistan’s own regulatory framework.
Meanwhile, the crypto invasion has got the United Arab Emirates — especially Dubai — rolling out the red carpet for crypto entrepreneurs. They’ve announced transparent token licenses, as well as international government-led blockchain programs. This, along with the overwhelming number of crypto companies and investors that already rushed to the region. Singapore has become a global fintech hub by marrying innovation with sensible regulation, attracting major crypto exchanges and blockchain startups.
Pakistan should heed the miscalculations seen in other countries. This time last year, Binance founder CZ was making himself at home in an American prison while serving a four-month sentence. He then pleaded guilty to violation of US anti-money laundering laws. This further emphasizes the need for strong AML/CTF measures to keep crypto out of the wrong hands.
The Path Forward
Pakistan's crypto U-turn is a bold move that could have significant implications for the country's economy. By welcoming regulation and encouraging innovation, Pakistan can ensure its place at the forefront of the global crypto landscape. On the surface, CZ’s appointment as a strategic advisor to the PCC seems like a very good sign. This is only the first step of the triperty.
The government needs to work closely with industry stakeholders to develop a comprehensive regulatory framework that addresses the challenges and risks associated with crypto. This framework should be clear and transparent as well as flexible enough to adapt quickly to the changing and rapidly evolving crypto landscape. Further, the federal government should finance educational and awareness programs to encourage responsible cryptocurrency adoption.
Implementing the right policies and regulations will unlock the full potential of crypto and blockchain technology in Pakistan. This would unleash tremendous economic development potential and create innovation economy opportunities for all of its citizens. Indonesia is determined to follow in the footsteps of Singapore, Dubai, and Switzerland as a leading, Web3-ready country. Specifically, its goals are to position the state as a regional powerhouse for Web3, digital finance, and blockchain-driven economic growth.
