Pakistan Establishes Digital Asset Authority to Oversee Cryptocurrency Sector
Islamabad, Pakistan – In a significant move to regulate its burgeoning cryptocurrency ecosystem, the Government of Pakistan has established the Pakistan Digital Assets Authority (PDAA). This newly created body will play a crucial role in overseeing various aspects of blockchain-based financial infrastructure in the country.
Regulatory Framework for the Crypto Market
The establishment of the PDAA follows an endorsement from Pakistan’s Ministry of Finance, highlighting the government’s recognition of the need for a robust regulatory framework. According to reports from the state-owned broadcaster, PTV, the authority will be responsible for licensing and regulating cryptocurrency exchanges, custodians, wallets, tokenized platforms, stablecoins, and decentralized finance applications.
Muhammad Aurangzeb, Pakistan’s Federal Minister for Finance and Revenue, emphasized the importance of this initiative, stating, “Pakistan must regulate not just to catch up, but to lead in the industry.” He added that the PDAA aims to create a future-ready framework that not only protects consumers but also attracts global investments, positioning the country at the forefront of financial innovation.
Key Responsibilities of the PDAA
The PDAA will have several significant responsibilities, which include:
- Tokenization of National Assets: The authority will work on tokenizing national assets and government debt, which may open up new avenues for investment and fiscal management.
- Regulated Bitcoin Mining: It will facilitate the monetization of Pakistan’s surplus electricity through regulated Bitcoin mining, potentially generating additional revenue for the nation.
- Support for Startups: The authority aims to assist local startups in building scalable blockchain-based solutions, fostering a culture of innovation and entrepreneurship.
This initiative aligns with recommendations from the Cryptocurrency Council of Pakistan, an advisory body launched on March 14, which includes industry experts such as former Binance CEO Changpeng Zhao.
Context and Previous Developments
The push for a regulatory framework comes in the wake of previous apprehensions about the risks posed by cryptocurrencies. Earlier, the Federal Investigation Agency of Pakistan proposed guidelines to combat issues related to terrorism financing, money laundering, and Know Your Customer (KYC) compliance.
Amid initial skepticism towards cryptocurrencies, the sentiment appears to be shifting. Just last year, Pakistan ranked ninth in Chainalysis’ 2024 crypto adoption index, primarily due to strong retail engagement in crypto transactions. Moreover, data from Statista indicates that the number of cryptocurrency users in Pakistan could exceed 27 million by 2025, with the total revenue in the crypto market projected to reach $1.6 billion.
Future of Cryptocurrency in Pakistan
As Pakistan navigates the complexities of cryptocurrency regulation, the formation of the PDAA signifies a proactive approach to harness the potential of digital assets. By establishing a regulatory framework, Pakistan aims to ensure a secure and organized environment for crypto enthusiasts and investors alike, while also leveraging the benefits of blockchain technology for economic growth.
With a rapidly evolving digital landscape, the success of the PDAA will be crucial in determining Pakistan’s position in the global cryptocurrency market and its ability to integrate digital assets into its financial system.
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