A LOT of money could be moving around unchecked. According to Chainalysis’s 2025 Global Adoption Index, Pakistan ranks third globally in crypto adoption, with most activity driven by small investors. Likewise, a 2020-21 report by the FPCCI estimated that Pakistanis collectively held around $20bn in cryptocurrencies. Research indicates that outside of Binance, a popular crypto exchange platform, much of the trading in cryptocurrencies occurs on local peer-to-peer platforms. These platforms enable direct transactions without Know-Your-Customer checks, allowing significant sums to move across borders with no oversight. The situation should trigger concern. The chairman of the Exchange Companies Association of Pakistan recently warned that people are buying dollars from foreign exchange companies and using them to purchase crypto. This, he believes, has resulted in roughly $600m ‘disappearing’ from the formal system. If true, it could get Pakistan into trouble with the FATF yet again. Crypto can create openings for money laundering and terror financing, drawing unwanted attention from the FATF, whose requirements for regulating crypto include collecting and sharing originator and beneficiary information and ensuring that service providers are properly licensed and supervised. On the regulatory side, Pakistan is still in the early stages of building this framework. The Pakistan Crypto Council, formed earlier this year, has yet to issue comprehensive guidelines.

Meanwhile, the Pakistan Virtual Asset Regulatory Authority has begun the process of licensing service providers but is still only inviting expressions of interest from global exchanges. Given the scale of grassroots crypto activity and the ease with which unlicensed platforms operate, the potential for illicit financial flows is substantial, underscoring the need for a robust regulatory framework. The Ecap chairman’s warning should prompt the authorities to complete their homework before global watchdogs start prying into the country’s financial system again.

Published in Dawn, November 25th, 2025