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Retail_Trading_Status

Gray-Zone Unknown
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Analysis ID
#457
Version
Archived
Created
2025-06-26 13:07
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Live

Executive Summary

Retail cryptocurrency trading in Pakistan exists in a 'Gray-Zone.' There is no explicit statutory ban on individuals holding or trading cryptocurrency; however, financial institutions are prohibited from facilitating crypto transactions, pushing users to P2P platforms and international exchanges. The State Bank of Pakistan (SBP) maintains a cautious stance, with a 2018 circular restricting banks from dealing in virtual currencies. While the government is exploring regulatory frameworks and established the Pakistan Crypto Council (PCC) and Pakistan Digital Assets Authority (PDAA), high-ranking officials still reiterate the ban and illegality of crypto transactions.

Key Pillars

The primary regulator is the State Bank of Pakistan (SBP), which prohibits financial institutions from facilitating cryptocurrency transactions. Core compliance requirements are emerging around FATF guidelines on Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF). While a formal licensing or registration requirement for individuals is not yet in place, upcoming regulations seem to focus on VASP (Virtual Asset Service Provider) compliance with FATF standards, including KYC/AML.

Landmark Laws

BPRD Circular No. 03 of 2018 (April 2018): Issued by the SBP, prohibiting banks and financial institutions from dealing in or facilitating virtual currency transactions. It warned that virtual currencies are not legal tender and are not issued or guaranteed by the Government of Pakistan, and clarified that the SBP has not authorized any entity to issue, sell, purchase, exchange, or invest in virtual currencies.

Considerations

Cryptocurrencies are not recognized as legal tender in Pakistan. The SECP and SBP have issued warnings about the risks associated with cryptocurrency investments, including potential fraudulent schemes and the lack of investor protection. Operational challenges include restricted access to formal banking channels, pushing users to P2P and international platforms, and the absence of a clear legal framework governing retail crypto trading.

Notes

Despite the SBP's stance and SECP's warnings, individuals continue to engage in crypto trading via P2P platforms and international exchanges. The establishment of the Pakistan Crypto Council (PCC) in March 2025 and the Pakistan Digital Assets Authority (PDAA) in May 2025 signal a potential shift toward regulation and promotion of blockchain technology. However, conflicting statements from authorities create confusion, with high-ranking officials reiterating the ban on cryptocurrencies even as the government explores regulatory frameworks.

Detailed Explanation

The retail cryptocurrency trading status in Pakistan is best described as a 'Gray-Zone' as of June 2025. While no explicit law criminalizes the holding or trading of cryptocurrencies by individuals, the regulatory environment remains ambiguous. The State Bank of Pakistan (SBP) issued BPRD Circular No. 03 of 2018 in April 2018, prohibiting banks and financial institutions from dealing in or facilitating virtual currency transactions. The circular warned that virtual currencies are not legal tender and are not issued or guaranteed by the Government of Pakistan. The SBP also clarified that it has not authorized any entity to issue, sell, purchase, exchange, or invest in virtual currencies. This effectively restricts formal banking channels for cryptocurrency trading, pushing activity to P2P platforms and international exchanges. The Securities and Exchange Commission of Pakistan (SECP) has also issued warnings, advising the public to exercise extreme caution with cryptocurrency investments, highlighting that no entities promoting them are recognized or authorized by the SECP or other regulatory agencies in Pakistan, and emphasizing the risks and potential for fraud. Despite these restrictions and warnings, individuals in Pakistan continue to trade cryptocurrencies. In late 2024 and early 2025, the government demonstrated increased interest in blockchain technology and digital assets. The Pakistan Crypto Council (PCC) was established in March 2025, tasked with developing a regulatory framework and promoting blockchain technology. In May 2025, the government approved the establishment of the Pakistan Digital Assets Authority (PDAA) to regulate the virtual assets economy, aiming to align with Financial Action Task Force (FATF) guidelines on Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF). There have also been discussions about creating a policy framework for digital money and service providers. However, high-ranking officials from the SBP and the Ministry of Finance reiterated in May 2025 that cryptocurrency remains banned and its transactions are considered illegal, with the SBP's 2018 directive still in effect. This dichotomy is the core reason for the 'Gray-Zone' status. Individuals are not explicitly barred from owning or trading crypto, but they operate without formal regulatory protection and cannot use local banking channels directly. While the PCC and PDAA signal a move towards regulation, a clear, legally binding framework is not yet in place. The focus of upcoming regulations appears to be on VASP (Virtual Asset Service Provider) compliance with FATF standards, which would include KYC/AML. Therefore, while not strictly 'Banned' for individuals, the current operational reality, coupled with prohibitive banking circulars and cautionary official statements, places retail crypto trading in a 'Gray-Zone'.

Summary Points

## Retail Cryptocurrency Trading Status in Pakistan (2025-06-26)

**Overall Status: Gray-Zone** - Not explicitly illegal for individuals to hold or trade, but lacks regulatory protection and access to formal banking channels.

### 1. Key Regulatory Bodies and Their Roles

*   **State Bank of Pakistan (SBP):**
    *   Prohibits banks and financial institutions from facilitating crypto transactions (BPRD Circular No. 03 of 2018, reiterated in 2025).
    *   Considers cryptocurrencies not legal tender and not guaranteed by the Government of Pakistan.
    *   Has not authorized any entity to issue, sell, purchase, exchange, or invest in virtual currencies.
*   **Securities and Exchange Commission of Pakistan (SECP):**
    *   Issues public warnings about the risks of cryptocurrency investments.
    *   States that no entities promoting cryptocurrencies are recognized or authorized by SECP.
    *   Highlights the potential for fraudulent schemes and lack of investor protection.
*   **Pakistan Crypto Council (PCC) (Established March 2025):**
    *   Tasked with developing a regulatory framework for cryptocurrencies and promoting blockchain technology.
*   **Pakistan Digital Assets Authority (PDAA) (Approved May 2025):**
    *   Aimed at regulating the virtual assets economy.
    *   Designed to align with Financial Action Task Force (FATF) guidelines on AML/CTF.

### 2. Important Legislation and Regulations

*   **BPRD Circular No. 03 of 2018 (SBP):** Prohibits banks and financial institutions from dealing in or facilitating virtual currency transactions.  *Still in effect as of May 2025.*
*   **Upcoming Regulations:** Focus expected on Virtual Asset Service Provider (VASP) compliance with FATF standards, including KYC/AML.
*   **Policy Framework for Digital Money and Service Providers:** Under discussion, aiming to set rules for digital money and related companies.

### 3. Requirements for Compliance (Future/Potential)

*   **KYC/AML Requirements:** Expected for platforms dealing with individuals, in line with FATF standards.
*   **VASP Compliance:** Virtual Asset Service Providers will likely need to comply with FATF guidelines.

### 4. Notable Restrictions or Limitations

*   **Banking Restrictions:** Banks and financial institutions are prohibited from facilitating crypto transactions.
*   **Lack of Regulatory Protection:** Individuals operate without formal regulatory protection.
*   **Limited Legal Recourse:** No protection available to investors from financial losses due to fraudulent schemes.
*   **Uncertainty:** Conflicting statements from authorities create uncertainty regarding the legal status of crypto.

### 5. Recent Developments or Changes

*   **Establishment of Pakistan Crypto Council (PCC) (March 2025):** Signals a move towards regulation and promotion of blockchain technology.
*   **Approval of Pakistan Digital Assets Authority (PDAA) (May 2025):** Indicates a commitment to regulating the virtual assets economy and aligning with FATF guidelines.
*   **Government Interest in Blockchain Technology:** Increased interest in the potential of blockchain technology and digital assets.
*   **Discussions on Strategic Bitcoin Reserve and Mining:** Government considering a Strategic Bitcoin Reserve and allocating power for mining.
*   **Reiteration of Ban by SBP and Ministry of Finance (May 2025):** High-ranking officials reiterated that cryptocurrency remains banned and its transactions are illegal under current regulations.

Full Analysis Report

Report on Retail Cryptocurrency Trading Status in Pakistan

Date: 2025-06-26

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 Current Status

Gray-Zone

2. Detailed Narrative Explanation

The status of retail cryptocurrency trading in Pakistan is best described as a Gray-Zone. While there isn't an outright statutory ban criminalizing the holding or trading of cryptocurrencies by individual citizens, the regulatory landscape remains ambiguous, characterized by conflicting statements from authorities and a lack of a comprehensive legal framework. Financial institutions are prohibited from facilitating crypto transactions, pushing activity to peer-to-peer (P2P) platforms and international exchanges, often at the user's own risk.

Historically, the State Bank of Pakistan (SBP), the country's central bank, has maintained a cautious stance. In April 2018, the SBP issued a circular (BPRD Circular No. 03 of 2018) prohibiting banks and financial institutions from dealing in or facilitating virtual currency transactions. This circular warned that virtual currencies are not legal tender and are not issued or guaranteed by the Government of Pakistan. The SBP also clarified it has not authorized any entity to issue, sell, purchase, exchange, or invest in virtual currencies. This effectively restricts formal banking channels for cryptocurrency trading.

Despite this banking restriction, individuals in Pakistan have continued to engage in cryptocurrency trading, primarily through P2P methods and on international platforms. The Securities and Exchange Commission of Pakistan (SECP) has also issued warnings, advising the public to exercise extreme caution with cryptocurrency investments, highlighting that no entities promoting them are recognized or authorized by the SECP or other regulatory agencies in Pakistan. The SECP has also noted that investments in cryptocurrencies can be risky and potentially part of fraudulent schemes, with no protection available to investors from financial losses.

In recent years, particularly in late 2024 and early 2025, there have been seemingly contradictory developments. The Pakistani government has shown increased interest in the potential of blockchain technology and digital assets. This includes the establishment of the Pakistan Crypto Council (PCC) in March 2025, tasked with developing a regulatory framework and promoting blockchain technology. Furthermore, the government approved the establishment of the Pakistan Digital Assets Authority (PDAA) in May 2025 to regulate the virtual assets economy, aiming to align with Financial Action Task Force (FATF) guidelines on Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF). There have also been discussions about creating a policy framework for digital money and service providers.

However, alongside these forward-looking initiatives, high-ranking officials from the SBP and the Ministry of Finance reiterated as recently as May 2025 that cryptocurrency remains banned in the country and its transactions are considered illegal under current regulations. They confirmed that the SBP's 2018 directive prohibiting financial institutions from facilitating crypto transactions is still in effect, and cases related to crypto are referred to law enforcement. This creates a confusing situation where the government appears to be exploring regulation and even promoting digital asset adoption (e.g., discussions on a Strategic Bitcoin Reserve and allocating power for mining) while simultaneously stating that crypto is illegal.

This dichotomy is the core reason for the "Gray-Zone" status. Individuals are not explicitly barred by law from owning or trading crypto, and many do so. However, they operate without formal regulatory protection, cannot use local banking channels directly for these activities, and face warnings from regulatory bodies about the risks involved. While new bodies like the PCC and PDAA signal a move towards regulation, a clear, legally binding framework permitting and governing retail crypto trading, including KYC/AML requirements for platforms specifically dealing with individuals, is not yet in place. The focus of upcoming regulations appears to be on VASP (Virtual Asset Service Provider) compliance with FATF standards, which would include KYC/AML.

Therefore, while not strictly "Banned" for individuals in terms of possession or P2P trading, and with "In-Progress" regulatory developments, the current operational reality, coupled with prohibitive banking circulars and cautionary official statements, places retail crypto trading in a "Gray-Zone". It is neither explicitly legal and regulated nor entirely illegal and actively prosecuted for individual users, but fraught with uncertainty and risk.

3. Specific, Relevant Text Excerpts

  • State Bank of Pakistan (SBP) (2018, reiterated in various statements): "State Bank of Pakistan through its Circular issued in 2018 cautioned public that cryptocurrencies are not legal tender, issued or guaranteed by the Government of Pakistan. Moreover, SBP clarified that it does not authorize or license any individual or entity for the issuance, sale, purchase, exchange or investment in any such Virtual Currencies (VCs)/ Coins/ Tokens in Pakistan. Therefore, all regulated entities were advised to refrain from processing, using, trading, holding, transferring value, promoting and investing in Virtual Currencies/ Tokens."
  • Securities and Exchange Commission of Pakistan (SECP) (Public Notice): "Please be informed that none of the persons, companies or entities promoting cryptocurrencies has been recognized or authorized by SECP or by other regulatory agencies in Pakistan to receive deposits from the public or to provide any investment or other financial services in or from Pakistan. The public should also be aware that any investment opportunities promoted by these persons, companies or entities are risky or can be a fraudulent pyramid scheme."
  • Dawn (May 2025, reporting on official statements): "Amid growing official promotion of Bitcoin adoption, both the State Bank of Pakistan (SBP) and the Ministry of Finance (MoF) on Thursday said that cryptocurrency remains banned in the country and all its transactions are illegal under current regulations." Finance Secretary Imdadullah Bosal stated, “There will be a legal framework only when the government formally takes a decision, but the current legal status is that crypto is not a legal tender in Pakistan”.
  • Coinfomania (April 2025, on recent developments): "The Pakistani government adopted a new stance toward cryptocurrencies by creating the Pakistan Crypto Council (PCC) during March 2025. Through this initiative the government shows its dedication to make Pakistan a blockchain center for the region while attracting foreign capital and developing the digital economy." However, it also notes the historical context: "The State Bank of Pakistan issued a directive in April 2018 which banned financial institutions from handling virtual currency transactions".
  • BitcoinLegality.io (May 2025): "In 2025, Bitcoin remains in a regulatory gray area in Pakistan. The SBP and other government bodies have not declared Bitcoin entirely illegal. Still, they have not established extensive regulations allowing its use as a legal tender or a recognized financial asset. The most recent statement from the SBP reaffirmed that no financial institution is authorized to facilitate cryptocurrency transactions. Yet, no explicit law criminalizes individual Bitcoin holding or peer-to-peer transactions."
  • Arab News (May 2025, on PDAA): "The government has approved setting up the Pakistan Digital Assets Authority (PDAA) to regulate blockchain-based financial infrastructure... Last month, Pakistan introduced its first-ever policy framework... to set rules for how digital money like cryptocurrencies and the companies that deal in it should operate in Pakistan. The policy has been formulated to align with compliance and financial integrity guidelines of the global Financial Action Task Force (FATF)."
  • Business Recorder (May 2025): "The State Bank of Pakistan (SBP) and the Ministry of Finance on Thursday disclosed that the cryptocurrency is not legal in Pakistan and trading of cryptocurrencies is not permitted in the country... According to the SBP officials, 'the SBP in 2018 issued instructions to the banks to prohibit trading of cryptocurrency in the country. Till now, it is not a legal tender.'"
  • Issuu (referencing Exness, 2025): "As of 2025, cryptocurrency is not officially banned in Pakistan, but it is not recognized as legal tender. The State Bank of Pakistan (SBP) issued a circular in 2018 prohibiting banks and financial institutions from facilitating crypto-related transactions. However: There is no law banning individuals from trading crypto."

4. Direct, Accessible URL Links to Sources

  1. (No specific URL, general time information)
  2. https://coinfomania.com/crypto-regulation-in-pakistan/
  3. https://ojs.ucp.edu.pk/index.php/PJLW/article/view/1000 (General context, refers to older SBP circulars)
  4. https://en.wikipedia.org/wiki/Legality_of_cryptocurrency_by_country_or_territory (Provides a general overview, references older SBP stance)
  5. https://ojs.ucp.edu.pk/index.php/PJLW/article/view/1000/761
  6. https://fpcci.org.pk/wp-content/uploads/2022/01/prospects-of-cryptocurrencies-2.pdf (Older document but outlines the "grey area" and P2P usage)
  7. https://www.dawn.com/news/1836108
  8. https://bitcoinlegality.io/countries/pakistan-bitcoin-legality-status-2025-latest-regulations-and-future-outlook/
  9. https://www.sbp.org.pk/FMR/2023/Box-8-1-Crypto-Assets.pdf (SBP's official stance document)
  10. https://www.arabnews.pk/node/2687836/pakistan
  11. https://techx.pk/cryptocurrencies-use-is-illegal-national-assembly-told/
  12. https://www.binance.com/en/square/post/p4provider-crypto-legal-in-pakistan-or-just-another-scam-1004515553519 (Binance Square, user-generated content but reflects recent news)
  13. https://unlock-bc.com/news/pakistans-state-bank-proposes-legalization-of-digital-assets/ (Reports on SBP proposals from Nov 2024)
  14. https://www.asiablockchainreview.com/pakistan-gets-serious-on-crypto-aiming-to-vie-with-dubai-and-singapore/
  15. https://www.brecorder.com/news/40303981
  16. https://en.wikipedia.org/wiki/Pakistan_Crypto_Council
  17. https://cointelegraph.com/news/pakistans-securities-regulator-mulls-new-legal-framework-for-crypto (Older article from 2020 but shows early SECP considerations)
  18. https://coinspaidmedia.com/news/pakistan-develops-regulatory-regime-cryptocurrencies/
  19. https://www.ccn.com/education/best-crypto-exchanges-in-pakistan/
  20. https://issuu.com/forexbrokernew/docs/is_cryptocurrency_legal_in_pakistan_2025_-_exness (Platform perspective, reflects user understanding)
  21. https://www.researchgate.net/publication/377884705_Issues_of_Legislation_of_Cryptocurrency_in_Pakistan_An_Analysis (Academic paper, published May 2025, though research date is earlier)
  22. https://cex.io/buy-bitcoin-pakistan (Exchange page, indicates KYC/AML for platform use)
  23. https://profit.pakistantoday.com.pk/2025/05/30/govt-considers-formal-digital-asset-rules-as-crypto-remains-banned/
  24. https://jamapunji.pk/protect-yourself/investor-alerts/public-notice-investments-cryptocurrencies-and-other-virtual-or (SECP Investor Alert)
  25. https://www.fxleaders.com/news/2025/05/22/pakistan-to-regulate-1-6b-crypto-market-with-new-authority/
  26. https://www.tradingview.com/news/tokenist/2025-05-21-pakistan-creates-digital-asset-authority-to-regulate-crypto/
  27. https://cointelegraph.com/news/pakistan-proposes-compliance-based-crypto-regulatory-framework-report
  28. https://cryptonews.com/news/pakistan-creates-digital-asset-authority-in-latest-pro-crypto-move.htm
  29. https://www.binance.com/en/square/post/jennell-goretti-szsu-crypto-regulations-in-pakistan-in-2024-586790938360 (Binance Square, user-generated content, reflects status in early 2024)
  30. https://www.centralbanking.com/fintech/crypto-assets/7962981/confusion-over-pakistans-crypto-policy

Web Sources (25)

Sources discovered via web search grounding

Search queries used (7)
  • current status of retail cryptocurrency trading in Pakistan 2024 2025
  • State Bank of Pakistan cryptocurrency regulations for individuals
  • SECP Pakistan guidelines on cryptocurrency trading for retail investors
  • Pakistan government official statements on cryptocurrency legality for citizens 2024 2025
  • Are individuals in Pakistan allowed to buy sell hold cryptocurrencies legally?
  • KYC AML requirements for cryptocurrency platforms in Pakistan
  • History of cryptocurrency regulation in Pakistan
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