New Delhi, Jan 15 (IANS) Pakistan’s dangerous gamble with cryptocurrency has raised fresh concerns about the country’s already weakening economy, according to a new report.
Nikkei Asia reports that Pakistan is rapidly expanding its footprint in the cryptocurrency space by welcoming global crypto exchanges.
“Pakistan believes it has come up with a way to make government and other assets more accessible to global investors, thereby improving liquidity, but one that is raising alarm bells,” according to the report.
Last month, the Pakistan Virtual Assets Regulatory Authority (PVARA) granted preliminary clearances to global exchanges Binance and HTX, “a development that has raised concerns about potential oversight gaps posing financial and regulatory risks”.
According to the report, around 17.5 million Pakistanis together hold nearly $5 billion worth of virtual assets on crypto platforms.
In parallel, Pakistan’s finance ministry signed a memorandum of understanding with Binance to explore tokenising up to $2 billion worth of government-owned assets.
These include sovereign bonds, treasury bills and commodity reserves, with the aim of improving liquidity and attracting global investors.
According to experts, Pakistan is moving too quickly without adequate safeguards. The pace of decisions has also created confusion even within government departments.
Licences for crypto exchanges are close to being granted even though Pakistan’s legal and regulatory framework for virtual assets is still incomplete, the report mentioned.
With interest rates expected to ease, taxes rising on savings, property markets losing momentum and equities no longer cheap, the easy gains of the past three years appear to be behind in the country.
According to a recent report in Pakistan-based publication Daily Times, the undocumented economy is expanding at a pace faster than any formal reform can catch. The report further reveals that dealers operate through WhatsApp, encrypted chats, and automated bots.
With VPN access, Pakistanis buy USDT (a cryptocurrency stablecoin) directly from peer-to-peer markets, move it to offshore wallets in Dubai or Turkey, convert it into dirhams, and deposit it into foreign accounts. People are not leaving the formal system because they enjoy illegality; they are leaving because the state has made formality financially irrational.
–IANS
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