Pakistan, one of the top 10 nations for remittances from abroad, is exploring the potential of blockchain technology to streamline the remittance process. Bilal bin Saqib, chief adviser to the finance minister and a member of the recently established Pakistan Crypto Council (PCC), made this announcement during a recent interview. Overseas Pakistanis sent over $31 billion in remittances during the 2023-24 fiscal year through traditional channels that are often slow and costly, with fees exceeding 5%.
Remittances serve as a crucial lifeline for many countries, providing financial support to families and acting as a buffer during economic crises. The potential for blockchain technology to enhance the efficiency of fund transfers from overseas cannot be overstated. By disintermediating entities such as correspondent banks, blockchain has the capacity to significantly reduce the costs associated with cross-border transactions, as noted by the OECD in 2020.
In his interview, Saqib indicated that the PCC intends to investigate blockchain-based remittance solutions to mitigate costs and delays in transfers. Furthermore, the council plans to invest in blockchain education, skill enhancement programs, and Web3 development. This initiative aims to cultivate local talent, increase employment opportunities, and ultimately drive sustainable economic growth.
Despite challenges, such as the prohibition of cryptocurrency trading and stablecoins under a 2018 State Bank of Pakistan circular, Pakistan is still among the leading Asian nations highlighted in Chainalysis’ 2024 Global Crypto Adoption Index. A considerable portion of the population employs digital assets to remain resilient against inflation and fluctuations in the foreign exchange rate.
Saib remarked, “This reflects significant demand despite the regulatory vacuum. With over 60% of Pakistan’s 240 million people under 30, our tech-savvy youth are poised to drive blockchain and Web3 innovation.” The PCC aims to unlock this untapped potential by advocating for a coherent and progressive regulatory framework.
The PCC is also examining initiatives such as tokenizing real-world assets and establishing regulatory sandboxes, while ensuring compliance with Financial Action Task Force (FATF) standards. With Pakistan being removed from the FATF’s gray list in 2022, the time is ripe for balanced regulatory developments that would support the crypto ecosystem.
However, challenges remain. Saqib highlighted concerns about illegal crypto outflows, emphasizing the need for regulation to prevent untracked cross-border transactions that could exacerbate dollar shortages. The PCC’s initial focus will be to create a robust and transparent regulatory framework that mandates know-your-customer (KYC) and anti-money laundering (AML) protocols for all crypto activities.
Global regulatory frameworks are evolving in response to growing interest in digital assets. In the United States, the recent announcements surrounding strategic bitcoin reserves under the Trump administration reflect a significant shift in perception toward digital assets. However, Saqib noted that such a reserve may not be practical for Pakistan, given the nascent state of its crypto enforcement.
“While building a BTC reserve from seized assets could be appealing, Pakistan’s crypto enforcement is still in its infancy, and illicit holdings are seldom intercepted at scale. Any move towards a strategic reserve would require careful dialogue with the IMF and FATF to avoid jeopardizing international support or Pakistan’s post-gray-list status,” Saqib cautioned.
As Pakistan navigates the complex landscape of blockchain and crypto regulations, the future of remittances looks promising. With the right strategies in place, the nation can harness the transformative power of technology to promote financial inclusion, economic stability, and growth.
