As dollar shortages persist in Pakistan’s open market, demand for digital dollar alternatives has accelerated, pushing many users towards crypto rails even as formal regulation remains a work in progress. While the Pakistan Virtual Assets Regulatory Authority (PVARA) continues deliberations on detailed rules, market activity has surged outside the regulatory perimeter, often facilitated by illegal operators.
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This regulatory lag has created a clear divide. Grey-market actors have moved quickly, while firms seeking to operate legally have slowed or redirected their investments. One such example is crypto startup Zar, which has shifted its focus to African markets while awaiting regulatory clarity in Pakistan. Industry experts say this caution is rational, as serious operators prefer jurisdictions offering predictability, banking integration, and clear supervisory roadmaps.
Crypto expert Aatiqa Lateef notes that uncertainty tends to reward informal channels rather than compliant businesses. She points to unresolved questions around the scope of no-objection certificates (NOCs), banking access, and the treatment of stablecoins as key gaps. Meanwhile, adoption continues to rise, with estimates suggesting tens of millions of Pakistani crypto users and billions of dollars potentially flowing into stablecoins outside formal banking channels.
According to Malik Bostan, chairman of the Exchange Companies’ Association of Pakistan, a significant portion of foreign currency purchases in 2025 may have bypassed banks altogether, heightening pressure on the formal foreign exchange market. Analysts warn that for an import-dependent economy, such displacement could undermine FX stability.
Recent developments offer cautious optimism. Global platforms like Binance and HTX have reportedly received preliminary NOCs, marking progress toward licensing. However, uncertainty remains around fees, timelines, and supervisory expectations. Banks, too, are exploring the potential of crypto rails and stablecoins for remittances but remain on hold until the State Bank of Pakistan and PVARA issue comprehensive guidelines.
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Experts broadly agree that Pakistan’s next step should be co-designed regulation rather than industry-led rulemaking. Clear standards on consumer protection, custody, disclosures, and market integrity will be critical to integrating crypto into the financial system without compromising stability.