In a significant policy shift, Pakistan is exploring the launch of a rupee-backed stablecoin and central bank digital currency to capture what officials estimate is a $25 billion cryptocurrency opportunity. The move signals the South Asian nation's recognition of digital assets as a tool for financial inclusion and economic growth, despite previous regulatory hesitations.
Pakistan is positioning itself to enter the digital currency arena with ambitious plans to develop both a rupee-backed stablecoin and a central bank digital currency (CBDC), according to recent reports. The initiative comes as the country recognizes a substantial $25 billion opportunity in the cryptocurrency sector that has largely operated outside formal regulatory frameworks.
The proposed digital currency strategy represents a notable evolution in Pakistan's stance toward cryptocurrencies. Historically, the State Bank of Pakistan has maintained a cautious approach to digital assets, citing concerns about financial stability and regulatory oversight. However, the new proposal suggests policymakers are acknowledging the inevitability of digital currency adoption and seeking to channel it through regulated mechanisms.
A rupee-backed stablecoin would provide Pakistani citizens with a digital asset pegged to their national currency, potentially offering the benefits of cryptocurrency technology while minimizing volatility concerns. This approach mirrors strategies adopted by several emerging economies looking to modernize their financial systems while maintaining monetary sovereignty.
The financial inclusion angle appears central to Pakistan's digital currency vision. With a significant portion of the population remaining unbanked or underbanked, blockchain-based payment systems could provide accessible financial services to millions. Digital currencies could enable faster, cheaper cross-border remittancesβa crucial consideration for Pakistan, which receives billions annually in overseas worker remittances.
The $25 billion figure likely represents both the estimated size of underground crypto trading in Pakistan and the potential economic value that formalization could unlock. By creating regulated digital currency options, authorities aim to bring this substantial economic activity into the formal financial system, enabling better oversight while supporting innovation.
However, significant challenges remain. Pakistan will need to develop robust technological infrastructure, establish comprehensive regulatory frameworks, and address cybersecurity concerns. The success of these initiatives will depend heavily on execution quality, public adoption rates, and coordination between various government agencies and financial institutions.
As global interest in CBDCs and regulated stablecoins intensifies, Pakistan's entry into this space could prove transformative for its digital economy, provided implementation addresses both innovation and risk management effectively.