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Pakistan’s Crypto Gambit

The hasty transition from a crypto ban to its sweeping adoption is naturally generating skepticism.

Pakistan Prime Minister Shehbaz Sharif lauded U.S. President Donald Trump as a “man of peace” and the “savior of South Asia” during the inaugural Board of Peace meeting on Thursday. Following the meeting of the board – which was put together by Trump to oversee international stabilization efforts in Gaza under a United Nations Security Council Resolution – Pakistan is expected to announce the participation of its troops in the peacekeeping mission. In addition to Gaza, Pakistan is also expected to play a major role in diplomacy with Iran, where Trump is contemplating military strikes.

These developments follow months of the Pakistani civil-military leadership’s wooing of Trump, which has resulted in the country drawing closer to the United States. This diplomatic approach is having an increasingly tangible impact on the policymaking in Islamabad – and one arena where Pakistan is making an offering for Trump is cryptocurrency.

Last month, Pakistan signed an agreement with a firm connected to World Liberty Financial (WLF), a cryptocurrency business launched in September 2024 by the U.S. president’s family. Pakistan’s army chief, Field Marshal Asim Munir, stood alongside the WLF cofounder Zachary Witkoff during the signing of the memorandum of understanding in Islamabad on January 14. 

Munir, who became the first to take up the newly created position of Pakistan’s Chief of the Defense Forces (CDF) last year, has benefited from Trump’s vote of confidence to brutally suppress dissent at home. 

The Pakistani leadership’s rapid opening of the country to global crypto players put a digital-age spin on the military establishment’s decades-old policy of allowing its assets to be used for the geopolitical gains of the highest bidder. 

As is often the case, Pakistan’s reward for its services to the Trump agenda, from crypto to Gaza, is expected to have a prominent fiscal component. The United States, on multiple occasions, has facilitated Pakistan’s bailout agreements with the International Monetary Fund (IMF) in exchange for military deals and agreements. Last year, the Trump administration exempted Pakistan from a $397 million aid cut in security assistance. 

This is the context for Pakistan’s crypto gambit. 

Last year, Pakistan abruptly moved on from its long-upheld ban on cryptocurrencies to form the Pakistan Crypto Council for the development of blockchain technology and digital assets. Islamabad also unveiled its crypto regulator, the Pakistan Virtual Asset Regulatory Authority (PVARA). On February 20, the new authority officially launched its crypto testing framework in line with the Finance Ministry’s plans to establish a digital asset ecosystem at home and align it with the global crypto market. In December 2025, the government also gave initial clearance for Binance and HTX to connect Pakistan with international investors. 

However, the hasty transition from a crypto ban to sweeping adoption is naturally generating skepticism.

“There has been no transparency regarding the move towards cryptocurrency. There was no discussion, no clarity, no stakeholders have been taken on board, especially about the risks involved – just a sudden government announcement of the deal [with World Liberty Financial],” former Pakistan Finance Minister Salman Shah told The Diplomat. 

Shah believes that the move toward a deregulated digital currency cannot work in a heavily centralized economy. “First, you need to deregulate the economy, and undo the overreaching influence of the government, whose own size and expenses need to be considerably reduced,” he argued. “Second, a major overhaul is needed in tax policies. Once the fundamentals are readdressed, only then can we properly digitize the economy.”

Observers have regularly criticized the Pakistani state’s disregard for the more evident economic priorities, and continued shelving of much-needed fiscal reforms, which have kept the country in a vicious cycle of IMF bailouts.

The military, which is Pakistan’s primary source of financial misappropriation and the root of the country’s lopsided economy, continues to maintain its totalitarian rule over the country. This raises questions about the neutrality and durability of any financial decisions, let alone one founded on the very idea of deregulation.

The government, however, maintains that its planned digital finance overhaul is crucial to reforming Pakistan’s economy and addressing these structural shortcomings. The government argues that embracing crypto would bolster transparency, increase financial inclusion, attract foreign investments, and enhance fiscal growth. 

Supporters underline digital currencies’ utility as a parallel investment mode that can counter a volatile domestic currency. Stablecoins are seen as especially potent with regard to forming a connection with the global digital economy, all the while protecting the value of one’s financial capital. Blockchain tech can streamline remittances, which contribute around 10 percent to Pakistan’s economy.

“Embracing open, neutral, and permissionless blockchain networks offers Pakistan a significant opportunity to leapfrog legacy systems and catch up with the global fintech frontier,” said Christian Cataliani, founder of the MIT Cryptoeconomics Lab. If implemented accordingly, the primary impact of a deregulated network is the creation of lower-cost financial infrastructure for citizens and businesses. This not only enhances domestic efficiency, but also enables interoperability with global markets, best exemplified by the mainstreaming of stablecoins in the international money movement. 

“To maximize this upside, adoption must be........

© The Diplomat