The Future of Digital Currency in Pakistan: A $25 Billion Economic Revolution
In the bustling corridors of Pakistan’s financial sector, a quiet revolution is brewing. It is not being led by shouting politicians or marching protestors, but by bankers, technologists, and forward-thinking regulators who see the writing on the wall. At the center of this storm is Zafar Masud, the President and CEO of the Bank of Punjab (BOP). A man who famously survived the PK8303 plane crash, Masud has dedicated his “second life” to reshaping the economic infrastructure of his country. His vision? To secure the future of digital currency in Pakistan.
The stakes could not be higher. According to recent estimates, the successful adoption and regulation of digital assets could unlock an economic value of $20 to $25 billion for Pakistan. This isn’t just about Bitcoin or trading; it is about fixing the structural flaws of an economy heavily reliant on cash and informal value transfer.
This article delves deep into the mechanics of this transformation, exploring the distinctions between speculative crypto and stablecoins, the role of the State Bank, and how global legislation like the US “GENIUS Act” is forcing Pakistan’s hand.
Related: Digital Currencies in Pakistan — Compelling Constructive Article in BR OPINION, Part 1
The Three Pillars of the New Economy
To understand the future of digital currency in Pakistan, one must first navigate the confusing lexicon of the digital asset world. Zafar Masud breaks this down into three distinct categories, each playing a different role in Pakistan’s economic roadmap.
1. Cryptocurrencies: The Speculative Asset
For the past decade, the term “crypto” has been synonymous with volatility. Assets like Bitcoin and Ethereum have been used largely for speculation. In Pakistan, despite a lack of formal regulation, adoption has been rampant. However, Masud notes a shift. Until 2025, the market was dominated by speculative activity. Now, as we look toward crypto regulation Pakistan 2026, the focus is shifting from “gambling” on price movements to actual utility.
2. Stablecoins: The Transactional Powerhouse
This is the game-changer. Stablecoins are digital currencies pegged to a stable asset, typically the US Dollar. Examples include USDT (Tether) and USDC (Circle). Masud emphasizes that while they currently make up only about 11% of the total crypto market capitalization, they are the fastest-growing segment in terms of real-world use. The distinction of stablecoins vs CBDC is crucial here. Stablecoins are privately issued but backed by fiat reserves, offering the speed of crypto with the trust of the dollar. They are becoming the preferred medium for international trade and remittances because they cut out the slow, expensive banking intermediaries.
3. Central Bank Digital Currencies (CBDC)
The third pillar is the State Bank of Pakistan digital currency. Unlike stablecoins, which are liabilities of private companies, a CBDC is a direct liability of the central bank. It is, effectively, a digital banknote. Zafar Masud points out that this is not a choice between private crypto and public CBDC; Pakistan needs both. “They will coexist,” he explains. “The CBDC will replace the physical notes in your wallet for domestic use, while stablecoins will likely dominate cross-border trade and remittances.”
The Global Context: The GENIUS Act and US Dominance
Why is this shift happening now? The answer lies in Washington, D.C. In July 2025, the United States passed the GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins Act). This legislation was a strategic masterstroke. For years, nations like China and Russia discussed “de-dollarization”—replacing the US dollar in global trade. The crypto world posed a similar threat, creating a parallel financial system outside US control.
By passing the GENIUS Act, the US effectively regulated stablecoins, ensuring that the most popular digital currencies in the world (like USDT and USDC) are backed 1:1 by US Treasury bills and dollars. The GENIUS Act impact on Pakistan is profound. It means that the “digital dollar” is now a regulated, safe, and globally accepted standard. Pakistan cannot ignore this. If the world moves to dollar-backed stablecoins for trade, Pakistan’s banking system must be ready to interface with them, or risk being cut off from the global velocity of money. “President Trump’s move was smart,” Masud notes. “By creating a regulated environment for Dollar-backed stablecoins, they have ensured that the US Dollar remains the backbone of the digital economy.”
Revolutionizing Remittances: The Killer App
The most immediate application for digital currency in Pakistan is in the remittance sector. Pakistan is a remittance-dependent economy, receiving roughly $30 billion annually through formal channels. However, a staggering $16 billion is estimated to flow through informal channels like Hawala and Hundi.
Why? Because the formal system is slow and expensive. Sending money from New York or London to a village in Punjab via Swift can cost 2% to 2.5% in fees and take days to clear. This is where USDT in Pakistan becomes revolutionary. “If a Pakistani expat sends USDT to their family, the cost is virtually zero,” Masud explains. “The transaction is instant.” However, there is a catch. The recipient in the village cannot buy groceries with USDT. They need Pakistani Rupees. This is where Zafar Masud Bank of Punjab (BOP) is stepping in.
The bank is preparing to act as an “off-ramp,” allowing users to instantly convert incoming remittance to Pakistan via crypto into local currency. By doing this, banks can capture that $16 billion informal market, boosting the country’s foreign exchange reserves and providing the government with a clearer picture of economic activity.
Financial Inclusion and the Cash Problem
Pakistan has a cash problem. Approximately 11.1 Trillion Rupees are currently in circulation as physical cash. This represents about 10% of the country’s GDP and nearly 37% of total bank deposits. This massive volume of physical cash fuels inflation, hampers tax collection, and makes monetary policy less effective. Financial inclusion Pakistan has historically been a struggle because servicing poor, cash-based customers is expensive for banks. Physical branches, cash vans, and security guards cost money.
Digital currency changes the math. With a State Bank of Pakistan digital currency or a regulated stablecoin wallet, the cost of servicing a customer drops to near zero. A farmer in Sindh or a student in Khyber Pakhtunkhwa can have a secure, interest-bearing store of value on their phone without ever visiting a bank branch.
This shift is critical for the younger demographic. Pakistan is a nation of Gen Z and Gen Alpha. These “digital natives” are already comfortable with in-game currencies and digital tokens. They find the friction of physical cash and paperwork archaic. If local banks do not offer them a seamless digital experience, they will simply use foreign apps, leaving Pakistani institutions in the dust.
Read more: Plow Savings — Creating Safety Net and Financial Inclusion
Tokenization: Democratizing Wealth
Perhaps the most visionary aspect of Masud’s roadmap is the tokenization of assets Pakistan. Currently, Pakistan has one of the lowest savings rates in the region. The reason is simple: the average citizen has nowhere to invest. Real estate, the traditional store of wealth, requires millions of rupees to enter. The stock market is often viewed as a club for the elite.
Tokenization solves this by breaking high-value assets into tiny digital fractions. “Imagine a high-rise building in Karachi worth billions,” Masud suggests. “Through tokenization, we can split ownership of that building into millions of digital tokens, each worth just 5,000 Rupees.” This allows a rickshaw driver or a small shopkeeper to save money in an asset that appreciates, rather than keeping cash under the mattress where it loses value to inflation. This democratization of investment could unleash a massive wave of domestic capital, reducing the country’s reliance on foreign debt.
SME Lending and Digital Footprints
The benefits of digitization extend to lending as well. The Bank of Punjab has been aggressive in this sector, having doubled its SME lending recently. But SME lending Pakistan faces a hurdle: information asymmetry. Small businesses often keep no formal books. They deal in cash. When they ask a bank for a loan, the bank has no way to verify their income, so they ask for collateral (like land or gold), which the SME owner doesn’t have.
In a digital currency ecosystem, every transaction leaves a trace. “We are moving towards cash-flow based lending,” says Masud. “If a shopkeeper uses a digital wallet for his daily sales, the bank can see his cash flow in real-time. We can lend against that data, without needing physical collateral.” This shift could finally bridge the credit gap that has stifled Pakistani entrepreneurship for decades.
The Role of BOP and the Road Ahead
BOP digital banking is positioning itself as a leader in this transition. But Zafar Masud warns that the window of opportunity is closing. “We do not have the luxury of time,” he cautions. “The landscape is changing fast. Global banks are already building reserves in stablecoins. If we do not build the rails to integrate with this new economy, we will be left behind.” The path forward requires a delicate balance. It requires the State Bank to launch its CBDC to secure monetary sovereignty.
It requires the Securities and Exchange Commission to regulate tokenization of assets Pakistan. And it requires commercial banks to build the interfaces that make these complex technologies invisible and easy for the common man to use.
Conclusion
The future of digital currency in Pakistan is not a distant sci-fi dream; it is an imminent economic imperative. With the potential to add $25 billion to the economy, slash remittance costs, and bring millions of unbanked citizens into the financial fold, the case for adoption is undeniable. As the world adjusts to the post-GENIUS Act reality, Pakistan stands at a crossroads. It can cling to the paper-based past, or it can embrace the digital future, turning its youth bulge and tech-savvy population into its greatest economic asset.
About the Program: Nasim Zehra @ 8
Nasim Zehra @ 8 is a flagship current affairs program that has long served as a cornerstone of intellectual discourse in Pakistan. Unlike standard talk shows that often prioritize sensationalism, this program is recognized for its analytical depth and policy-oriented discussions. It provides a platform where complex national issues—ranging from geopolitical shifts and national security to the future of digital currency in Pakistan—are dissected by experts.
The program’s format typically involves one-on-one interviews or panel discussions with key decision-makers, including federal ministers, CEOs of major banks like the Bank of Punjab, and international analysts. In the context of the digital economy, the program has been instrumental in bridging the gap between technical crypto-concepts and public understanding, explaining how global shifts like the GENIUS Act impact on Pakistan. By focusing on “the why” behind the news, the show empowers viewers to understand how global financial trends directly affect their local wallets and the national economy.
The Host: Nasim Zehra
Nasim Zehra is one of Pakistan’s most distinguished journalists, authors, and foreign policy analysts. With a career spanning several decades, she has earned a reputation for “unflinching credibility.” Educated at the Fletcher School of Law and Diplomacy at Tufts University and Quaid-e-Azam University, her academic background in business and diplomacy provides her with a unique lens to view the future of digital currency in Pakistan.
As a veteran interviewer, Zehra is known for her calm yet piercing questioning style. She does not just report the news; she contextualizes it. Her work as a syndicated columnist for international outlets like Arab News and Khaleej Times has made her a global voice for Pakistani perspectives. Beyond the screen, she is the author of the critically acclaimed book From Kargil to the Coup: Events that Shook Pakistan, showcasing her ability to handle sensitive, high-stakes information. In her interviews with figures like Zafar Masud, she leverages her deep understanding of financial inclusion in Pakistan to ensure that technical economic discussions remain accessible to the general public.
About the Channel: 24 News HD
24 News HD is a leading national news network in Pakistan, known for its rapid reporting and high-production-value current affairs programming. It serves as the primary broadcaster for high-impact interviews regarding crypto regulation Pakistan 2026, reaching millions of households across the country.
The Great Pivot: The State of Digital Currencies in Pakistan in 2026
For nearly a decade, the relationship between the State of Pakistan and digital currencies was defined by skepticism, prohibition, and confusion. As recently as 2024, the official stance was a resounding “no.” Yet, as we stand in February 2026, the landscape has undergone a radical transformation. Pakistan has executed one of the most dramatic regulatory U-turns in its financial history, moving from a “ban” mentality to a structured, regulated embrace of the digital asset economy.
This shift is not accidental. It is driven by a desperate need to capture informal remittances, a global wave of regulation led by the United States, and the realization that the country sits on a potential $25 billion digital goldmine.
Here is the comprehensive state of digital currencies in Pakistan as of early 2026.
The New Legal Reality: The Virtual Assets Act 2025
The watershed moment arrived in July 2025, when President Asif Ali Zardari signed the Virtual Assets Ordinance (later Act), 2025. This legislation effectively ended the “grey era” of crypto in Pakistan.
Key Provisions of the Act:
- Legalization: Cryptocurrency is now a legal asset class in Pakistan. It is recognized as “property” and “investment,” though notably not as legal tender. You can buy, hold, and trade Bitcoin, but you cannot legally pay for your chai or groceries with it directly; the Pakistani Rupee (PKR) retains its monopoly on settlement for goods and services.
- The Regulator (PVARA): The Act established the Pakistan Virtual Asset Regulatory Authority (PVARA). This independent body, distinct from the State Bank, is responsible for licensing exchanges, enforcing KYC (Know Your Customer) norms, and protecting investors.
- Licensing: Major global exchanges, including Binance and HTX, have secured provisional licenses under PVARA, allowing them to operate legally within the country. This has allowed Pakistani banks to integrate with these platforms, enabling users to transfer funds to crypto exchanges through standard banking channels—a feat impossible just two years ago.
Taxation: With legalization comes taxation. The Federal Board of Revenue (FBR) now imposes a flat 15% Capital Gains Tax (CGT) on crypto profits. While this was initially met with resistance from traders accustomed to tax-free gains, it has provided the government with a new, lucrative revenue stream.
The SBP and the Digital Rupee (CBDC)
While PVARA regulates private crypto (like Bitcoin and Ethereum), the State Bank of Pakistan (SBP) has focused its energy on the Digital Rupee, Pakistan’s Central Bank Digital Currency (CBDC).
The Pilot Phase: As of late 2025, the SBP launched a pilot program for the Digital Rupee involving select commercial banks. Unlike decentralized crypto, the Digital Rupee is a centralized liability of the state—essentially digital cash.
Why the Digital Rupee?
- Programmable Money: The government aims to use the Digital Rupee for social welfare payments (BISP). By “programming” the currency, they can ensure that aid money is spent only on authorized essentials (like food or medicine), reducing leakage and corruption.
- Reducing Cash Dependency: Pakistan has a massive cash-in-circulation problem. The Digital Rupee is designed to bring trillions of rupees from under mattresses into the digital banking net.
The Global Catalyst: The US GENIUS Act
Pakistan’s domestic policy did not change in a vacuum. A major external catalyst was the GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins Act), signed into law by US President Donald Trump in July 2025.
This US legislation standardized “stablecoins” (digital currencies pegged to the Dollar), requiring issuers to hold 1:1 cash reserves.
- Impact on Pakistan: This move legitimized the “Digital Dollar” (USDT/USDC). For Pakistan, this is crucial. Stablecoins are the primary vehicle for informal remittances. By having a regulated, safe “Digital Dollar,” Pakistani banks can now confidently facilitate cross-border transfers that bypass slow, expensive Swift networks.
- The “Burn” Mechanism: Local banks, led by institutions like the Bank of Punjab (BOP), are developing mechanisms to “burn” (redeem) incoming digital dollars and instantly credit PKR to local accounts. This promises to bring billions of dollars from the informal “Hawala” market into the formal banking system.
The $25 Billion Opportunity
Zafar Masud, President of the Bank of Punjab and a vocal advocate for digital finance, estimates that proper adoption of this ecosystem unlocks a $20–25 billion opportunity for Pakistan.
- Remittances: Pakistan receives ~$30 billion formally and an estimated ~$15-20 billion informally. Digital wallets and stablecoins could shift that informal volume into formal channels, stabilizing the country’s foreign exchange reserves.
- Tokenization of Assets Pakistan: The “files” system in Pakistani real estate is notorious for fraud and illiquidity. The new framework encourages tokenization—putting real estate deeds on a blockchain. This allows a small investor to buy a “fraction” of a commercial plot for as little as PKR 5,000, democratizing wealth creation that was previously reserved for the elite.
- SME Lending: Digital transactions create a data trail. Banks are now experimenting with “cash-flow based lending” for SMEs. Instead of asking for collateral (which most shopkeepers don’t have), banks use the shopkeeper’s digital transaction history to assess creditworthiness.
Challenges and Risks
Despite the optimism, significant hurdles remain in 2026:
- The FATF Shadow: Pakistan remains under strict scrutiny from the Financial Action Task Force (FATF). PVARA has to walk a tightrope—allowing innovation while ensuring crypto isn’t used for terror financing. The licensing requirements for exchanges are incredibly strict, which has pushed some smaller players out of the market.
- Tech Literacy: While Gen Z is crypto-native, a vast portion of the population is still uncomfortable with digital banking. The risk of scams—phishing, fake coins, and “pump and dump” schemes—remains high. PVARA has launched public awareness campaigns, but fraud is evolving faster than regulation.
- Energy Concerns: With the government approving crypto mining farms to utilize “surplus electricity,” critics argue that this energy could be better spent on industrial manufacturing rather than mining Bitcoin, which offers fewer jobs per megawatt.
Conclusion
In 2026, Pakistan is no longer fighting the tide of digital currency; it is attempting to channel it. The “Wild West” days are over. The new era is one of regulated innovation, where the Digital Rupee coexists with licensed crypto exchanges and Dollar-backed stablecoins.
For the common citizen, the promise is cheaper remittances and new investment opportunities. For the state, it is the hope of documenting the undocumented economy. The infrastructure is being laid, the laws are signed, and the “Digital Pakistan” dream is finally moving from a PowerPoint presentation to a tangible economic reality.