Pakistan, known as one of the top 10 nations for receiving remittances from abroad, is considering using blockchain technology to modernize the process, according to Bilal bin Saqib, chief adviser to the finance minister and a member of the newly formed Pakistan Crypto Council (PCC), who stated this on Monday.
In the year 2023-24, overseas Pakistanis sent over $31 billion through traditional channels that are often slow and costly, Saqib informed CoinDesk in an interview. Fees can go up to 5%.
Remittances are the earnings that migrants send back home, either as cash or goods. The cash from abroad serves as a crucial lifeline in many countries, providing a buffer during crises and a potential driver of sustainable growth.
“The PCC will explore blockchain-based solutions for remittances to reduce costs and delays,” he stated. “Additionally, we will invest in blockchain education, training programs, and Web3 development to nurture talent, enhance employment opportunities, and stimulate economic growth.”
Blockchain technology has the potential to enhance fund transfers from overseas by eliminating intermediaries like correspondent banks, which could significantly reduce the cost of cross-border transactions, as observed by the OECD in 2020.
Although trading in cryptocurrencies and stablecoins is currently prohibited in Pakistan under a 2018 circular from the State Bank of Pakistan (SBP) banning financial institutions from facilitating crypto transactions.
However, the country is among the five Asian nations featured in Chainalysis’ 2024 Global Crypto Adoption Index. A considerable percentage of the population is using digital assets to hedge against inflation and volatility in the foreign exchange rate and the broader economy.
“This indicates a substantial demand despite the regulatory uncertainties. With over 60% of Pakistan’s 240 million population under the age of 30, our tech-savvy youth are well-positioned to drive innovation in blockchain and Web3,” Saqib said. “The PCC aims to unleash this untapped potential by advocating for a clear, progressive regulatory framework.”
The PCC is also exploring initiatives such as tokenizing real-world assets and establishing regulatory sandboxes while ensuring compliance with Financial Action Task Force (FATF) standards. Pakistan was removed from the FATF gray list in 2022.
“The issue of illegal crypto outflows is a concern,” he noted. “Without regulation, cryptocurrencies can facilitate untraceable cross-border transactions, exacerbating dollar shortages. The first step for the PCC is to establish a robust, transparent regulatory framework mandating know-your-customer (KYC) and anti-money laundering (AML) compliance for all crypto activities.”
Regulatory policies are evolving globally, including in Southeast Asia, following President Donald Trump’s endorsement of the digital assets industry after winning the U.S. presidential election.
Last week, Trump announced plans for a strategic bitcoin reserve, which will be comprised of BTC and other coins seized during enforcement actions. Saqib was unsure if such a move would be suitable for Pakistan.
“While the idea of building a BTC reserve from seized assets may seem appealing, Pakistan’s enforcement of crypto regulations is still in its early stages, and illicit holdings are rarely intercepted on a large scale. Any steps towards establishing a strategic reserve would require careful discussions with the IMF and FATF to avoid jeopardizing international support or Pakistan’s post-gray-list status,” Saqib explained.
