Pakistan’s 9 Million Crypto Users May Soon Enter Tax Net as FBR Plans New Law

The Federal Board of Revenue (FBR) has initiated consultations with experts to draft Pakistan’s first-ever legislation on cryptocurrency tax in Pakistan, signaling the government’s intent to bring the fast-growing digital asset market under formal regulation and taxation.

According to official sources, the FBR is exploring mechanisms to tax profits, income, and assets generated through cryptocurrency trading and mining. The move follows a directive from the Federal Tax Ombudsman (FTO), which had taken up a complaint urging the tax authority to clarify its policy on digital currencies.

Money and profits generated and assets created through cryptocurrency dealings will remain undocumented and untaxed unless this regime is streamlined through legal provisions and clear rules.

-FTO directive to the FBR

Background: A Rapidly Growing Crypto Market

Globally, there are an estimated 560 million cryptocurrency users, with Pakistan ranking as the sixth-largest adopter. Recent data suggests that around 9 million Pakistanis are actively engaged in cryptocurrency trading, mining, or investment, despite the absence of formal legislation.

The State Bank of Pakistan (SBP) had earlier issued a cautionary circular in April 2018 warning of the “risks associated with virtual currencies”. However, the circular did not declare cryptocurrencies illegal, leaving a grey area in Pakistan’s regulatory environment.

This legal ambiguity has led to a surge in unregulated transactions, with the FTO warning that “huge commercial transactions are being carried out in cryptocurrency outside the ambit of the tax regime.” The FTO described this as a “height of neglect, inattention, and ineptitude” on the part of the FBR, emphasizing the need for urgent policy action.

Why Regulation Matters

Experts say that bringing cryptocurrency under a structured tax and compliance framework could help Pakistan broaden its tax base, curb money laundering, and generate significant revenue from a previously untapped sector.

Under international best practices, such as those of the Financial Crimes Enforcement Network (FinCEN) in the United States, crypto miners are considered money transmitters and are therefore subject to financial and tax regulations.
Adopting similar rules, the FTO noted, would align Pakistan with global standards and help mitigate the risk of crypto-based financial crimes.

If properly regulated, this newly emerging window can ease some of the government’s revenue constraints. the FTO stated, recommending the FBR develop “well-defined rules” to document and tax digital transactions.

Next Steps: Drafting the Law

The FBR’s Policy Wing has confirmed that consultations with technical experts and industry stakeholders are underway. Officials said the matter is of a “technical nature” and will likely be addressed in the upcoming Finance Bill, with input from the State Bank, the Ministry of Finance, and digital economy experts.

The FTO has directed the FBR to engage with all relevant stakeholders, including the complainant who raised the issue, to ensure that the proposed framework is inclusive and practical.

A senior FBR official told local media that the department aims to “tap this potential avenue and streamline crypto taxation in a way that promotes innovation while ensuring compliance.”

What This Means for Pakistan’s Economy

Formal recognition and taxation of cryptocurrency could mark a turning point for Pakistan’s digital economy, potentially opening new investment channels and legitimizing crypto trading under state supervision.

Analysts believe that legal clarity would encourage crypto startups, blockchain developers, and fintech firms to operate within Pakistan rather than relocating to jurisdictions with clearer rules.

However, challenges remain, particularly in defining the scope of taxable activities, establishing valuation mechanisms for volatile crypto assets, and setting up monitoring systems to detect illicit flows.

Pakistan’s move toward cryptocurrency legislation represents a major step in bridging the gap between innovation and regulation. While the FBR’s consultations are still in early stages, experts say a structured approach could not only legitimize crypto trading but also help plug revenue leakages in an increasingly digital economy.

With millions of Pakistanis already active in the crypto space, the urgency to formalize and tax digital assets has never been greater, and the upcoming Finance Bill may finally provide the clarity the market has long awaited.

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