Islamabad( The COW News Digital)Pakistan’s State Bank has clarified that cryptocurrency is neither legal nor outrightly illegal in the country but exists in a “grey area,” sparking debate among lawmakers about regulation, taxation, and its potential misuse.
The statement came during a session of the Senate Standing Committee on Finance, where members were reviewing the “Virtual Asset Bill 2025.” The Deputy Governor of the State Bank of Pakistan (SBP) told lawmakers that while cryptocurrencies are not officially regulated, they are not banned either. “Our youth have significant expertise in crypto, and at present, cryptocurrency is not illegal — it is in the grey area,” he said.
Committee Chairman Senator Saleem Mandviwalla questioned the classification, pointing out that crypto transactions are currently being conducted through informal channels such as hundi and hawala, which are illegal under Pakistani law. “If hundi and hawala are banned, how can crypto transactions be considered just ‘grey’?” he asked.
Senator Mohsin Aziz raised concerns about the criminal use of digital assets, revealing that cryptocurrency is reportedly being used for ransom payments. “I have learned from credible sources that cash is no longer demanded in many kidnapping cases — payments are being made in crypto,” he said, urging the government to ensure strict regulation.
The discussion also touched on the taxation framework, with Senator Dilawar Khan highlighting Pakistan’s complex tax system. “With super tax, sales tax, and countless other levies, businesses are struggling. If we imposed a uniform 5% tax across the board, revenue collection could increase by up to 40%,” he argued, linking tax reforms with the broader debate on regulating digital assets.
Experts say Pakistan’s stance on cryptocurrency remains ambiguous, with investors facing uncertainty due to lack of formal legislation. The “grey” status means crypto trading continues informally, often via foreign exchanges, with no clear protection for users.
The government is now under pressure to finalize a regulatory framework through the Virtual Asset Bill 2025, which is expected to address taxation, anti-money laundering measures, and mechanisms to curb criminal misuse.
Analysts believe that clarity on crypto regulation could boost Pakistan’s participation in the global digital economy while minimizing risks of illicit use. Until then, the market is likely to remain volatile, leaving traders and investors in legal limbo.
