Pakistan Cannot Regulate Cryptocurrencies Under Current System- Shabbar Zaidi

Pakistan is facing a big challenge when it comes to cryptocurrencies. Former Federal Board of Revenue (FBR) chairman and economist Shabbar Zaidi has said that the current financial system in Pakistan cannot regulate cryptocurrencies. He explained that the State Bank of Pakistan tightly controls foreign exchange, which makes the regulation of virtual assets nearly impossible.

Mr Zaidi shared his views at a session on “Adopting Digital Currency and Cryptocurrency in Pakistan: Possibilities and Concerns,” organised by the Pakistan Institute of International Affairs (PIIA). He highlighted both the risks and opportunities of cryptocurrencies in Pakistan.

According to him, a law to regulate cryptocurrencies has been passed and is under discussion in parliament. However, he stressed that virtual currencies are designed to be unregulated. “A currency born unregulated cannot be regulated,” he remarked. He said cryptocurrencies like Bitcoin thrive because they leave no trail.

He compared Pakistan’s situation with the United States. In the US, digital currencies have gained popularity due to a freer foreign exchange regime. In Pakistan, on the other hand, banks cannot buy or sell dollars without the State Bank’s approval. This difference makes regulation here much harder.

Widespread Use Among Pakistanis

Mr Zaidi estimated that nearly nine million Pakistanis are involved in trading or holding cryptocurrencies. Bitcoin is the most popular among them. He said that many people are already using digital assets to settle transactions. In fact, he revealed that cryptocurrencies are even used in under-invoicing during trade with China, similar to the hawala system.

He made it clear that the question is not whether Pakistan is moving too fast or too slow in adopting crypto. Instead, the real issue is that the system itself cannot regulate it.

Trust and Currency

Mr Zaidi explained that all currencies, whether traditional or digital, are based on trust. He pointed out that the US dollar today and the British pound in the past both gained acceptance because of trust. Similarly, a trusted digital currency could one day become a global medium of exchange.

He added that asset-backed cryptocurrencies could, in theory, be introduced. But he doubted their popularity. Unregulated digital assets attract users because they allow conversion of black money into white, something asset-backed models cannot provide.

See Also: Pakistan Approves New Security Standards to Regulate Cryptocurrency by 2028

Global Examples

While discussing international practices, Mr Zaidi noted that India has formally rejected cryptocurrencies. In contrast, the US market has embraced them, where crypto is even tied to political debates. He claimed that former US president Donald Trump supported digital currencies, quoting a banker who said the Trump family earned $2.4 billion from crypto.

Digitisation vs Crypto

Mr Zaidi also drew a clear line between digitisation and cryptocurrency. Digitisation, he said, is about transparency and documentation. Crypto, however, thrives on anonymity and a lack of control.

Experts at the event agreed that the use of virtual currencies in Pakistan will likely continue to grow. Tight foreign exchange controls make it difficult for people to send or receive money abroad. As a result, more Pakistanis may turn to crypto as an alternative.