Cryptocurrencies in Pakistan: Time has come

Speaking about cryptocurrencies and their prevalence in a particular country, you are unlikely to remember Pakistan. This small state in South Asia is in no way associated with new financial technologies and the digital revolution. However, in reality everything is completely different.

A research report by the Policy Advisory Council (PAB) of the Federation of Chambers of Commerce and Industry of Pakistan (FPCCI) in 2021 showed that the total ownership of cryptocurrencies in this Islamic state is $20 billion – almost twice as much as the $10.3 billion of foreign exchange reserves currently held by the State Bank of Pakistan (SBP). According to the Chainalysis report for 2021, Pakistan ranks 3rd in the Global Cryptocurrency Adoption Index, almost every 3rd resident owns digital money in this young Islamic republic.

Pakistan boasts one of the fastest growing economies. 65% of the active population of the country are young people under 40 years old, therefore new technologies are being introduced much faster here and laws that create a favorable environment for digital business are being adopted more easily. And cryptocurrencies are becoming an important part of this environment.

After the ban on digital currencies mining in April 2018, a real boom of blockchain technologies began in the country. The growth in the number of companies working on the creation of DeFi projects in Pakistan contributed to the creation of a large number of new jobs and contributed to the fact that blockchain specialists from other regions of the world began to come to the country. And although DeFi's digital business still faces obstacles in the form of legal and logistical challenges, the digitalization of Pakistan continues.

In just five years, cryptocurrencies in Pakistan have gone from an illegal gambling tool and a highly volatile asset to a practically recognized Central Bank tool for calculating and accumulating funds. In their speeches, members of the Government of Pakistan emphasize the importance of blockchain technology for creating transparent financial systems.

"Pakistan has one of the largest freelance communities, as well as a huge untapped market for digital translation services, which can benefit greatly from DeFi solutions," says Javwad Nayyar, co-founder and director of strategic planning at DAO Protect.

From the point of view of Pakistan's monetary culture, paper fiat assets created by institutional monopolistic authorities are considered illegal by a large part of the population. Therefore, the ideas of legalizing cryptocurrencies are supported here among the intelligentsia, entrepreneurs, legislators and parliamentarians.

The regulatory framework for the use of the new asset class should be developed in Pakistan already in 2023-2024. Without it, the demand for cryptocurrency is shifting towards unregulated operators.

"Given the number of digital assets owned and operated by residents of the country, the government simply has no other choice but to bring cryptocurrencies into the legal field and create mechanisms to protect against illegal actions by underground companies and fraudsters," says Javvad Nayyar.

Pakistan has the potential to attract blockchain companies that have lower risk thresholds than traditional financial services companies. They will ensure that appropriate KYC/AML policies and procedures are implemented in order to comply with local regulations. This will benefit the state's tax system and accelerate its economic development.

With the right approach to regulating the turnover and use of cryptocurrencies, Pakistan may well become one of the largest digital asset markets with a huge volume of transactions. At the moment, more than 12 million Pakistanis are constantly trading on crypto exchanges and performing exchange operations. And this is one of the signs that the crypto revolution in Pakistan has already took place, we just need to wait for its fruits to benefit the whole country.

IslamicCoin is the first project to provide the community with powerful financial technology that allows for seamless transactions, support innovation and charity. The project is 100% compliant with Sharia law and benefits the community. Developers focus on sustainable development and use technology and innovation to ensure financial sustainability.

"At the heart of Islamic finance is the prohibition on charging interest. Islamic finance has always been focused on not shifting most of the risks to one side of the financial relationship. In Islamic finance, balance and transparency of transactions should be observed, which can negatively affect our society," says Mohammed Alhashmi, one of the founders of IslamicCoin.

IslamicCoin is aimed at 1.1 billion Muslims using the Internet. The project creates convenient tools designed for users who have never been owners of cryptocurrencies. Thus, the creators of IslamicCoin are expanding the capabilities of the Muslim online community by providing it with opportunities to use a new form of digital money and involving them in the modern digital world.