Trump backs crypto, Pakistan embraces it. How long must India wait?
By Apoorva Mittal, ET Bureau | Updated: July 13, 2025, 09:45 IST
Cryptocurrency has emerged as a powerful tool reshaping geopolitical and economic strategies worldwide. While Pakistan has made bold moves to embrace digital assets and engage with influential figures like Donald Trump and Binance founder Changpeng Zhao, India remains hesitant, grappling with regulatory uncertainties and security concerns. This divergence raises pressing questions about India’s roadmap for cryptocurrency amid growing global acceptance and strategic usage of crypto assets.
Pakistan’s Strategic Crypto Embrace
In early April 2025, a significant development occurred in Pakistan’s cryptocurrency landscape. Changpeng Zhao, the Chinese-born Canadian founder of Binance—the world’s largest cryptocurrency exchange—became an advisor to the newly formed Pakistan Crypto Council (PCC). Established only in March 2025, PCC aims to build a regulatory framework to attract foreign investment and legitimize cryptocurrency use in Pakistan, a country previously wary of digital currencies.
However, deeper strategic motives have emerged. During ongoing conflicts such as Operation Sindoor, Pakistan’s alignment with crypto has extended beyond investment. The nation signed up with World Liberty Financial (WLF), a crypto company linked to the family of former US President Donald Trump—a move potentially designed to curry favor with the White House. Pakistan’s President Asif Ali Zardari further cemented the country’s pro-crypto posture by signing an ordinance on July 9 to create the Pakistan Virtual Asset Regulatory Authority (PVARA). This autonomous federal body will license, regulate, and supervise all entities dealing with virtual assets.
For Pakistan—a nation facing severe economic challenges and reliant on International Monetary Fund (IMF) bailouts—embracing cryptocurrency is more than economic policy; it is a strategic lever. Pakistan is also exploring bitcoin mining using surplus energy to create strategic bitcoin reserves, further positioning crypto as a financial channel with geopolitical underpinnings.
The Global Crypto Landscape: Who’s Leading?
The US too is making decisive moves toward cryptocurrency legitimacy, particularly focused on stablecoins—cryptocurrencies pegged to stable assets like the US dollar. The majority of stablecoins (approximately 98%) are dollar-linked, underscoring their significance in global finance. The upcoming GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins), set for a vote in the week of July 14, 2025, seeks to establish a clearer regulatory framework in the US, although concerns about conflicts of interest and regulatory oversight persist.
Neighboring Bhutan presents a contrasting but equally strategic approach by quietly accumulating roughly $1.3 billion in bitcoin reserves, nearly 40% of its GDP. Bhutan uses its abundant hydropower for bitcoin mining, integrating crypto into tourism and infrastructure projects. This diversification strategy boosts foreign reserves and supports public spending, offering a model of crypto-driven economic development.
Meanwhile, sanctioned countries like Russia, Iran, and North Korea leverage cryptocurrencies to circumvent international restrictions, demonstrating crypto’s utility as a tool for geopolitical maneuvering beyond conventional banking systems.
India’s Hesitation and Regulatory Confusion
India’s crypto story is marked by caution and lack of clarity. Despite an active market for digital assets, India remains in regulatory limbo. The Supreme Court has repeatedly pressed the government to clarify the legal status of cryptocurrencies, with hearings highlighting concerns about under-the-table crypto trades that could impact the economy.
Currently, India’s regulation focuses primarily on taxation, with a flat 30% tax on capital gains from crypto assets and a 1% Tax Deducted at Source (TDS) on transactions exceeding Rs 10,000, effective since 2022. Crypto exchanges must register with the Financial Intelligence Unit – India (FIU-IND) as mandated by the finance ministry in 2023. However, a comprehensive policy defining regulation and oversight is still awaited, with a promised discussion paper delayed beyond its scheduled June release.
Critics argue that this delay leaves India vulnerable, especially as crypto usage for terror financing shows an upward trend globally, according to a recent report by the Financial Action Task Force (FATF). The Indian government recently directed exchanges to monitor transactions more closely, particularly in sensitive border regions like Jammu and Kashmir, underscoring security concerns.
Security Implications and the Need for Policy
Experts warn that India’s cautious stance could have unintended consequences. Anirudh Suri, Managing Director of India Internet Fund, explains that Pakistan’s fluid crypto policy could facilitate financial flows with strategic impacts detrimental to India, potentially undermining efforts to block terror financing through traditional channels.
Subimal Bhattacharjee, an independent cybersecurity and defense policy consultant, stresses the necessity of a clear crypto policy to mitigate risks posed by rogue actors exploiting digital assets. The enforcement of such policies is vital for India to safeguard its financial and national security interests in a rapidly evolving digital ecosystem.
Looking Ahead: India’s Crossroads
As countries from the US to Bhutan and Pakistan integrate crypto into their economic and strategic frameworks, India faces mounting pressure to define its position. Balancing financial innovation with security concerns, India’s policymakers are urged to craft a coherent regulatory framework. This would not only ensure investor and consumer protection but also help the nation leverage emerging technologies without compromising its economic and geopolitical standing.
The world is moving fast, and India’s delay raises a critical question: How long must India wait?
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Photo credit: Ewan Kennedy
Source: The Economic Times