Pakistan's Crypto Landscape Shifts: Digital PKR on the Horizon, but Caution Advised for Traders

On September 3, 2025, Pakistan made a significant move in the cryptocurrency sphere, partially lifting the ban on digital assets while simultaneously announcing plans for a state-backed digital currency. However, crypto enthusiasts should temper their excitement, as strict regulations remain in place.

From Prohibition to Partial Acceptance

Rewind to 2018: The State Bank of Pakistan (SBP) imposed a sweeping ban, prohibiting financial institutions from engaging in cryptocurrency-related activities. This move effectively sidelined Pakistan from the global crypto revolution.

Fast forward to today: The SBP has declared a notable policy shift. The 2018 advisory will be rescinded, effectively decriminalizing cryptocurrency ownership. Additionally, the central bank revealed its intention to introduce a Digital Rupee, joining the ranks of nations exploring Central Bank Digital Currencies (CBDCs).

The Fine Print: Limitations Persist

While this development marks progress, it's crucial to understand the nuances:

1. Crypto assets remain restricted for payments and investments.
2. The Digital Rupee will function as a state-controlled digital cash system.
3. Transfers and holdings of the Digital Rupee will be subject to SBP regulations.
4. Potential applications include remittances and fintech experiments.

What's Off the Table?

The new framework explicitly prohibits:

1. Open cryptocurrency investing
2. Using established cryptocurrencies like Bitcoin or Ethereum for retail transactions

A Calculated Approach

Pakistan's strategy appears to be one of cautious exploration rather than wholesale adoption. By introducing a CBDC while maintaining restrictions on decentralized cryptocurrencies, the government aims to retain control over the digital financial landscape.

The Road Ahead

This policy shift raises intriguing questions about Pakistan's long-term crypto strategy:

1. Could this be the first step towards comprehensive legalization?
2. Or is it merely a way to keep digital assets under strict state oversight?

As the situation evolves, market participants should stay informed and adhere strictly to regulatory guidelines to avoid legal complications.

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