Pakistan

Okay, here is the comprehensive report on the current status of Retail Cryptocurrency Trading in Pakistan, structured as requested.

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**Report: Retail Cryptocurrency Trading Status in Pakistan**

**Date:** April 13, 2025

**Topic:** Retail_Trading_Status

**Description:** Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).

**1. Identified Status:**

Gray-Zone

**2. Detailed Narrative Explanation:**

The status of retail cryptocurrency trading (buying, selling, holding) for individual citizens and residents in Pakistan is best described as a **Gray-Zone**. While not explicitly illegal for individuals to own or trade cryptocurrencies, there is no formal legal or regulatory framework governing these activities, creating significant ambiguity and risk. Furthermore, Pakistan is currently undergoing a significant policy shift, actively moving towards establishing a regulated environment, but this framework is not yet implemented.

*   **Historical Context and SBP's Stance:** The State Bank of Pakistan (SBP), the central bank, issued Circular No. 03 in April 2018, advising all Banks, Development Finance Institutions (DFIs), Microfinance Banks, Payment System Operators (PSOs), and Payment Service Providers (PSPs) to "refrain from processing, using, trading, holding, transferring value, promoting, and investing in Virtual Currencies/Tokens." The SBP also issued public warnings advising citizens to be cautious and refrain from crypto activities due to risks like high volatility, potential for illegal use (money laundering, terror financing), lack of legal protection, and the risk of fraud or exchange failures. Crucially, this circular prohibited *regulated financial institutions* from facilitating crypto transactions but did not constitute an outright ban on individuals *possessing* or *trading* crypto assets, particularly through channels outside the domestic banking system (e.g., peer-to-peer (P2P) or international exchanges). The SBP later clarified in court proceedings (2019) that it had not declared crypto illegal but maintained its cautionary stance.

*   **Current Practice and Ambiguity:** Despite the SBP's restrictions on formal banking channels (making direct purchases via Pakistani bank cards on exchanges difficult), cryptocurrency adoption is significant in Pakistan, with estimates suggesting millions of users. Trading primarily occurs through P2P platforms on international exchanges (like Binance P2P) or direct P2P transactions. This lack of regulation creates a "grey area" where the activity persists but without legal certainty, consumer protection, or official oversight. This ambiguity has reportedly been exploited by some authorities (like elements within the Federal Investigation Agency - FIA) for harassment or extortion of traders.

*   **Shift Towards Regulation (In-Progress):** Recognizing the global trend, domestic adoption, potential for investment, and pressure from international bodies like the Financial Action Task Force (FATF) regarding AML/CFT controls, Pakistan has recently pivoted towards regulation.
    *   **Pakistan Crypto Council (PCC):** In March 2025, the government established the Pakistan Crypto Council (PCC), chaired by the Finance Minister and including representatives from the SBP, SECP, and relevant ministries. Its mandate is to develop a regulatory framework for digital assets, aiming to integrate blockchain technology, attract investment, and ensure compliance with international standards (like FATF Recommendation 15). High-profile advisors have been appointed to guide this process.
    *   **Proposed Regulatory Framework:** In April 2025, the FIA announced a proposed comprehensive policy framework for regulating virtual assets and Virtual Asset Service Providers (VASPs). This framework focuses on AML/CFT compliance, KYC procedures, licensing for exchanges and wallets, and aligning with FATF standards. This policy requires legislative approval and stakeholder consultation, with phased implementation anticipated to begin in 2026.
    *   **Legal Amendments:** Proposals to amend key legislation, including the SBP Act (potentially defining digital currency), the Anti-Money Laundering Act, the SECP Act, and the Income Tax Ordinance, are being considered to formally accommodate and regulate digital assets.
    *   **Court Intervention:** Highlighting the urgency and the current lack of clarity, the Peshawar High Court in April 2025 directed the federal government to formulate a policy within two months specifically to address *illegal* crypto trading, implicitly acknowledging the unregulated nature of the current market.

*   **Conclusion on Status:** Pakistan is in a transitional phase. The old approach of discouraging crypto via banking restrictions, while not banning individual ownership, is being replaced by active efforts to build a formal regulatory regime. Until this new framework is legally enacted and implemented (expected 2026 onwards), retail crypto trading exists in a **Gray-Zone** – neither explicitly legal and regulated nor completely banned, operating largely outside the formal financial system with associated risks and uncertainties.

**3. Specific Relevant Text Excerpts:**

*   **On SBP's 2018 Stance:**
    > "General Public is advised that Virtual Currencies/Coins/Tokens (like Bitcoin, Litecoin, Pakcoin,. OneCoin, DasCoin, Pay Diamond etc.) are neither recognized as a Legal Tender nor has SBP authorized or licensed any individual or entity for the issuance, sale, purchase, exchange or investment in any such Virtual Currencies/Coins/Tokens in Pakistan. Further, Banks/ DFIs/ Microfinance Banks and Payment System Operators (PSOs)/ Payment Service Providers (PSPs) have been advised not to facilitate their customers/account holders to transact in Virtual Currencies/ Initial. Coin Offerings (ICOs) /Tokens vide BPRD's Circular No. 03 of 2018."
    *   *Source:* State Bank of Pakistan (SBP), Public Notice (undated, referencing 2018 circular) [16]

    > "In view of the above, the General Public in their own interest is advised to be cautious of and refrain from indulging in activities relating to mining, trading, exchanging, transferring value, promoting and investing of Virtual Currencies/Coins/Tokens to avoid any potential financial loss and legal implications."
    *   *Source:* State Bank of Pakistan (SBP), Public Notice (undated, referencing 2018 circular) [16]

*   **On the "Gray-Zone" / Not Illegal Status:**
    > "Cryptocurrencies including bitcoin are not officially regulated in Pakistan; however, it is not illegal or banned. As of 16 January 2021, the State Bank of Pakistan has not authorized any individuals or organizations to carry out the sale, purchase, exchange, and investment of virtual currencies, coins, and tokens."
    *   *Source:* Wikipedia, Legality of cryptocurrency by country or territory (Note: While Wikipedia is secondary, this summary aligns with primary source interpretations) [2]

    > "Crypto trading in Pakistan currently lies under the grey area, it is currently unregulated however not deemed illegal for general public."
    *   *Source:* Federation of Pakistan Chambers of Commerce & Industry (FPCCI), "Prospects of Cryptocurrencies" report [10]

    > "Currently, Pakistan lacks a legal framework to regulate crypto mining and trading. This absence of regulation means these activities are neither explicitly legal nor illegal. The SBP, in a 2019 statement to the Sindh High Court, clarified that it had not declared crypto illegal but cautioned against its volatility."
    *   *Source:* The News International (Jan 16, 2025) [19]

*   **On Recent Regulatory Push (PCC & FIA Framework):**
    > "Prime Minister Shehbaz Sharif, on March 15, 2025, constituted the Pakistan Crypto Council (PCC), mandated to introduce new regulatory guidelines for launching digital currency – a move backed by all key stakeholders."
    *   *Source:* The Express Tribune (Mar 31, 2025) [24]

    > "Pakistan has unveiled its first comprehensive policy to regulate virtual assets and virtual asset service providers (VASPs), marking a significant step towards incorporating digital finance into the national economy. As per reports, the new framework, announced by the Federal Investigation Agency (FIA), was developed under the Anti-Money Laundering (AML) and Counter Terrorism Financing (CTF) authority. The policy sets clear guidelines for the handling of cryptocurrencies, including regulations for exchanges, wallets, and other service providers."
    *   *Source:* Pakistan Today / Associated Press of Pakistan (Apr 11, 2025) [6]

    > "Designed to improve compliance, reduce financial crime risks, and foster innovation in blockchain-based finance, the policy aligns with the Financial Action Task Force (FATF) Recommendation 15... The policy will undergo a review by stakeholders and is expected to receive legislative approval, with phased implementation set to begin next year [2026]."
    *   *Source:* Pakistan Today / Associated Press of Pakistan (Apr 11, 2025) [6]

*   **On Court Order Regarding Illegal Trading:**
    > "The Peshawar High Court (PHC) has directed the federal government to formulate a policy within two months regarding the prevention of illegal business and trading of crypto currency across the country... The petitioner contended that... there is no regulation or legal framework to control such currencies."
    *   *Source:* The Express Tribune (Apr 12, 2025) [17]

**4. Direct URL Links to Sources:**

1.  **SBP Public Notice (Summarizing 2018 stance):** [https://www.sbp.org.pk/Downloads/publicnotices/Public-Notice-Virtual-Currencies.pdf](https://www.sbp.org.pk/Downloads/publicnotices/Public-Notice-Virtual-Currencies.pdf) [16]
2.  **Wikipedia - Legality of Cryptocurrency (Context):** [https://en.wikipedia.org/wiki/Legality_of_cryptocurrency_by_country_or_territory#Pakistan](https://en.wikipedia.org/wiki/Legality_of_cryptocurrency_by_country_or_territory#Pakistan) [2]
3.  **FPCCI Report - Prospects of Cryptocurrencies (Gray Area):** [https://fpcci.org.pk/wp-content/uploads/2022/01/prospects-of-cryptocurrencies.pdf](https://fpcci.org.pk/wp-content/uploads/2022/01/prospects-of-cryptocurrencies.pdf) [10]
4.  **The News International - FIA Scrutiny (Gray Area, SBP Clarification):** [https://www.thenews.com.pk/print/1269049-crypto-traders-exposed-to-fia-scrutiny-amid-regulatory-vacuum](https://www.thenews.com.pk/print/1269049-crypto-traders-exposed-to-fia-scrutiny-amid-regulatory-vacuum) [19]
5.  **The Express Tribune - PCC Formation:** [https://tribune.com.pk/story/2460481/pakistans-late-crypto-move](https://tribune.com.pk/story/2460481/pakistans-late-crypto-move) [24]
6.  **Pakistan Today / APP - FIA Policy Framework:** [https://www.pakistantoday.com.pk/2025/04/11/pakistan-unveils-first-policy-framework-for-regulating-virtual-assets/](https://www.pakistantoday.com.pk/2025/04/11/pakistan-unveils-first-policy-framework-for-regulating-virtual-assets/) [6]
7.  **The Express Tribune - Peshawar High Court Order:** [https://tribune.com.pk/story/2462287/govt-ordered-to-make-crypto-currency-policy](https://tribune.com.pk/story/2462287/govt-ordered-to-make-crypto-currency-policy) [17]
8.  **Al Jazeera - PCC Advisors, Market Context:** [https://www.aljazeera.com/news/2025/4/10/clear-message-can-binance-founder-help-pakistan-become-a-crypto-power](https://www.aljazeera.com/news/2025/4/10/clear-message-can-binance-founder-help-pakistan-become-a-crypto-power) [4]
9.  **Coinfomania - Regulatory Overview (Recent):** [https://coinfomania.com/crypto-regulation-in-pakistan/](https://coinfomania.com/crypto-regulation-in-pakistan/) [3]
10. **CEX.IO - Trading Practicalities (Not Banned):** [https://cex.io/how-to-buy-crypto-pakistan](https://cex.io/how-to-buy-crypto-pakistan) [7]
11. **Business Recorder - Legal Amendments Needed:** [https://www.brecorder.com/news/40371492/pakistans-roadmap-to-crypto-legalisation-i](https://www.brecorder.com/news/40371492/pakistans-roadmap-to-crypto-legalisation-i) [14]
12. **Cointelegraph - FIA Framework Report:** [https://cointelegraph.com/news/pakistan-proposes-compliance-based-crypto-regulatory-framework-report](https://cointelegraph.com/news/pakistan-proposes-compliance-based-crypto-regulatory-framework-report) [18]
13. **CoinMarketCap - Trading Practicalities (Gray Area):** [https://coinmarketcap.com/community/articles/63580147a54b8a762e2892d7/](https://coinmarketcap.com/community/articles/63580147a54b8a762e2892d7/) [22]

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**Disclaimer:** This report is based on publicly available information up to April 13, 2025. The regulatory landscape for cryptocurrencies is evolving rapidly. Users should consult with qualified legal and financial professionals for advice specific to their circumstances.