Islamabad, Pakistan – Call it a crypto coup.
Flanked by Pakistan’s flags, Changpeng Zhao, founder of Binance, the world’s largest cryptocurrency exchange, on Monday signed on to become an adviser to the country’s newly formed regulator for the sector.
After being skittish about digital currencies for years, Islamabad in March launched the Pakistan Crypto Council (PCC), aimed at embracing innovation in the sector, while also creating a regulatory framework which protects investors and the financial system.
By convincing one of the sector’s biggest names to join as an adviser to the PCC, Prime Minister Shehbaz Sharif’s government appears eager to signal an openness to crypto at a time when the global economy is in major churn, said analysts.
“We are sending a clear message to the world: Pakistan is open for innovation,” Finance Minister Muhammad Aurangzeb said, describing Zhao’s appointment as a “landmark moment”.
“With CZ onboard, we are accelerating our vision to make Pakistan a regional powerhouse for Web3, digital finance, and blockchain-driven growth,” Aurangzeb said, referring to Zhao by his initials – as he is widely known in the finance world.
Zhao, a Chinese-born Canadian tech entrepreneur with personal wealth estimated at more than $60bn, served a four-month prison term in the United States last year after pleading guilty to violating US anti-money laundering laws. But that hasn’t dimmed his stature in the crypto world.
According to Pakistan’s Ministry of Finance, Zhao will work closely with the government to develop a “competitive crypto ecosystem”, while providing guidance on “regulation, infrastructure, education, and adoption”.
“Pakistan is a country of 240 million people, over 60 percent of whom are under the age of 30. The potential here is limitless,” Zhao was quoted as saying in the ministry’s announcement.
The appointment of Zhao is the latest in a recent wave of moves by the Sharif government aimed at regulating and integrating cryptocurrency innovations into the national financial framework.
Pakistan’s central bank had banned financial institutions from processing cryptocurrency transactions in 2018. Now, the country’s view of crypto appears to be changing.
Following the PCC’s formation, Pakistan also appointed Bilal bin Saqib, a British Pakistani tech entrepreneur, as “chief adviser” to Finance Minister Aurangzeb.
Saqib, speaking after his appointment last month, said that Pakistan already had many crypto users.
“Some 15 to 20 million Pakistanis hold crypto today. The country possesses billions of US dollars in crypto transactions, so of course we want to make this legal. We want to have a clear regulatory framework so we can bring in investments and we can let the ecosystem flourish in Pakistan,” he said in an interview.
Observers point to the influence of US President Donald Trump’s pro-crypto policies, noting that Pakistan is reassessing its own position, evidenced by the PCC’s formation and Zhao’s appointment.
While he was a critic of cryptocurrencies in his first term as president, Trump has over time changed his views.
Soon after taking oath in January, the US president signed an executive order to create a presidential working group tasked with proposing new crypto laws and regulations.
Subsequently, last month, Trump announced the names of five cryptocurrencies, including Bitcoin, which he expects to include in a new US strategic reserve of cryptocurrencies.
Saqib also acknowledged Trump’s impact on global crypto regulations.
“Trump is making crypto a national priority, and every country, including Pakistan, will have to follow suit,” he said.
Does Pakistan need crypto?
Although there is no definitive data on the number of Pakistani crypto users, Similarweb, a website that tracks mobile app downloads, shows that the Binance app is the fourth most downloaded finance app in Pakistan.
Ali Farid Khwaja, an investor and chairman of KTrade Securities, a leading Pakistani stock brokerage firm, said digital assets like cryptocurrencies are an innovation in digital finance that have created systems better suited for financial transactions.
“Pakistan needs to regulate crypto. For a country where roughly 20 million people are already on offshore global trading platforms, the government is not collecting any taxes as those platforms are not locally licensed,” Khwaja told Al Jazeera.
He added that regulation does not mean a “blanket endorsement”.
“Till now, Pakistan had taken the approach of ignoring it. Now, it is too large and has gained so much global adoption that it would be naive to maintain the strategy of pretending it doesn’t exist. Hence, I think having a council is a step in the right direction,” Khwaja added.
However, some experts remain sceptical, questioning the utility of crypto for a country like Pakistan.
Ibrahim Khalil, a Canada-based banking and finance professional, said Pakistan risks jumping on a bandwagon others have already abandoned.
“Pakistan needs cryptocurrency like a fish needs a bicycle. The focus seems to be on promoting crypto and blockchain rather than defining what problem it solves. Globally, blockchain hasn’t lived up to its hype, and beyond Bitcoin, there’s no compelling success story,” Khalil told Al Jazeera.
Bitcoin was the first decentralised digital currency, invented by the pseudonymous figure Satoshi Nakamoto following the 2007–08 global financial crisis. Nakamoto introduced the blockchain system, a digital ledger that stores transactions across a network of computers, to enable financial transactions without banks, financial firms or governments.
Will Pakistan succeed in regulating cryptocurrencies?
A key allure of cryptocurrencies is their “peer-to-peer” model, where users conduct digital transactions through a decentralised network, maintaining anonymity.
Khalil said the PCC’s aim to regulate crypto defeats one of crypto’s biggest selling points: avoiding regulatory supervision and taxes.
He said if a crypto fund registered with the Pakistan Stock Exchange becomes a reality, it could create a sophisticated workforce of auditors and regulators to manage crypto holdings.
“However, this remains a long shot as such a fund would require robust custody arrangements, sophisticated auditors who understand crypto’s nuances, and a regulatory framework that can handle market manipulation and investor protection,” he added.
KTrade’s Khwaja also said that, like companies offering stocks and mutual funds, firms providing financial products for trading and investment must be regulated.
“This means people investing would comply with the appropriate Know Your Customer and anti-money laundering laws and pay the relevant taxes. This also means that the regulator will protect people from scams and penalise bad actors,” he said.
Khwaja believes regulation will reduce crypto usage, as users would be “less keen” to open accounts when required to disclose their sources of wealth and pay taxes.
“A better approach will be to encourage not adoption, but responsible and regulated adoption. That means, first, offshore unregulated platforms should be immediately banned with strict enforcement. Secondly, the companies offering these services should comply with all domestic regulations.”
Does Pakistan have the infrastructure to support cryptocurrencies?
Ranked 97th in mobile internet speed and 142nd in broadband speed globally, Pakistan’s weak digital infrastructure remains a major barrier to crypto adoption, say experts.
Electricity shortages, especially in the summer, continue to affect consumers, while energy prices remain high.
Bitcoin, the most popular cryptocurrency, was capped at 21 million coins by Nakamoto. As of December 2024, 19.9 million have been mined, leaving about 1.1 million yet to be created.
Bitcoin mining involves solving complex mathematical equations during transactions, a process that consumes enormous amounts of power, typically carried out in large data centres.
Khawaja said Pakistan had “missed the boat” on crypto mining but added that countries like the United Arab Emirates are now relying on nuclear power to mine Bitcoin, something Pakistan could explore.
Khalil added that Pakistan’s electricity network has deep structural issues. He cited El Salvador as an example, a Central American country that made Bitcoin legal tender yet saw little adoption or influx of mining firms.
“Global digital mining companies and digital asset providers require abundant and cheap energy, a robust legal framework, and reliable internet. It is highly unlikely that mining firms or AI server farms would choose Pakistan just because we started promoting crypto,” he said.
Can Pakistan prevent armed groups from using cryptocurrencies?
The anonymity of digital assets has also made them attractive to criminal and violent groups.
Tehreek-e-Taliban Pakistan (TTP), a banned armed group waging war against the state since 2007, recently announced plans to raise funds through cryptocurrencies, urging supporters to use Binance for donations.
The United Nations Security Council’s Counter-Terrorism Committee has also raised concerns about groups such as ISIS/ISIL, al-Qaeda, and others using digital assets for financing.
Mona Thakkar, a research fellow at the US-based International Centre for the Study of Violent Extremism, said TTP and its factions are increasingly using digital assets, likely expanding their use for anonymously moving funds.
“Beyond cryptocurrency, TTP in its latest crowdfunding appeals is also utilising PayPal addresses. This suggests that TTP may be using foreign-based accounts of financial intermediaries or supporters operating outside of Pakistan, in countries where PayPal is available, to escape regulatory oversight,” Thakkar told Al Jazeera.
Thakkar, who specialises in tracking militant financing networks, added that while armed groups may rely heavily on crypto donations for public fundraising, these cannot replace the long-established “hawala” networks used to move money across borders.
Hawala is an informal remittance method outside of traditional banking systems, based on trust rather than physical money transfers.
“Cryptocurrency fundraising efforts complement these traditional methods, along with other legal and illegal activities used by militants to raise funds. In fact, a growing trend in hawala transactions involves cryptocurrencies, offering new ways for illicit actors to move money discreetly,” she added.
Thakkar said criminal groups have developed sophisticated methods to bypass detection, such as using decentralised platforms and privacy-focused cryptocurrencies like Monero, often relying on informal exchanges.
With a market capitalisation of more than $3bn, Monero is currently the 28th biggest cryptocurrency, with a particular focus on privacy. Its key features make it nearly impossible to identify the sender and the receiver. They also conceal the volume of transactions.
“To counter this, Pakistan’s financial institutions must strictly mandate centralised exchanges operating in Pakistan, such as Binance,” she said.
But will Pakistan do that, when the Binance founder – who left the CEO position in 2023 – is in a position to influence the country’s crypto policies?
Zaki Khalid, a Rawalpindi-based open-source intelligence consultant, questioned if the government conducted its background checks before announcing the appointment of Zhao, calling it an “unusual process”.
“Zhao, Binance’s co-founder, was implicated, then jailed, on money laundering charges. And only last month the proscribed TTP boasted about setting up their own Binance wallet for donations which could very well be forwarded for operational financing,” Khalid told Al Jazeera.
“Zhao being embraced by the federal government indicates that necessary due diligence and vetting for potential conflicts-of-interest have been brushed aside.”
