At the Sustainable Development Policy Institute (SDPI) conference in Pakistan recently, analysts revealed that Pakistanis may have invested between US$20 and 30 billion in asset-backed cryptocurrency instruments such as stablecoins or tokenised real world assets. Geo News + The News International both reported this information.
Though exact figures remain elusive, this estimation demonstrates the depth of latent investment in digital assets across Pakistan.

Scope and Implications
According to experts, this figure represents only holdings in “asset-backed” digital instruments; crypto trading by Pakistanis could eventually reach US$300 billion, equalling Pakistan’s GDP which currently stands at approximately US$400 billion.
Geo News wants to stress these numbers are only indicative since Pakistan lacks an established legal structure which mandates disclosure or tracks virtual-asset holdings.
The News International
Pakistan’s vast unregistered digital-asset holdings present both an opportunity and risk. On one hand, bringing these assets into the regulated economy could unlock substantial capital, expand financial inclusion and lower remittance fees–which Pakistan receives in significant volumes. Policymakers in particular have highlighted their potential use for creating a Central Bank Digital Currency (CBDC).
Daily Times
On the other hand, unmonitored investments raise serious concerns over cyber security risk, fraud risk and money-laundering as well as potential financial instability in case of severe market declines.

Analysts emphasize the urgency of creating an appropriate framework, stressing that any delay could cost Pakistan billions. One estimate suggested Pakistan may lose up to US$25 billion due to delayed regulations keeping pace with digital asset adoption worldwide. [The Current, 8/7/18].
Pakistan lacks meaningful regulations that could help it capitalize on digital finance’s momentum, leaving them behind international norms and falling further behind the competition.

Key regulatory recommendations include:

Establish a clear licensing regime for virtual-asset service providers with “Know Your Customer” (KYC) and anti-money-laundering (AML) protocols. (see Current Issue).
Geo News reports: India plans on introducing a crypto asset-backed stablecoin (CBDC or similar) that uses rupees as backing, in order to integrate digital assets into the formal financial system and help support remittance flows.
Due to the infancy of digital asset markets in Pakistan, cybersecurity safeguards, investor protection measures and phased implementation should take precedence.
Government officials appear to be responding, as evidenced by the establishment of bodies like Pakistan Crypto Council and Pakistan Virtual Assets Regulatory Authority (PVARA). On Wikipedia
However, legislation and enforcement structures remain under development.

Risks and structural challenges loom large on any business project’s agenda.

Although cryptocurrency offers many potential upsides, significant challenges remain. Since many holdings of crypto assets exist off-ledger and peer-to-peer platforms, capturing them under an asset declaration scheme presents both practical and political difficulties. Furthermore, its volatility exposes investors and by extension economies to potential shocks; scholars warn that without transparency mounting digital-asset holdings may undermine financial stability similar to shadow credit markets.
Aligning digital-asset regulation with existing financial-sector frameworks such as central banking, payments and taxation will be challenging; capacity gaps exist for oversight, data analytics and enforcement.

Conclusion Pakistanis may hold as much as US$30 billion worth of crypto assets – a shocking realization. This signal marks both the size of Pakistan’s latent digital-asset economy as well as the urgency for regulatory action. Properly employed, crypto and tokenised assets could support remittances, expand inclusion, modernise finance in Pakistan – yet without appropriate regulation they run the risk of becoming unstable rather than stimulating growth. Policymakers now face the task of turning “quiet holdings” into opportunities while protecting against risks that come with entering an emerging financial frontier.