Pakistan is one of the emerging markets in Southeast Asia with a population of approximately 250 million, and a country where the majority of the population lives below the poverty line.
The people of Pakistan are hopeful; many believe that good times are coming, and the country's future is bright amid political chaos and a tumbling financial situation for 2023. However, the overall situation seems to be getting on track, with the Karachi Stock Exchange (KSE) reaching its historical all-time highs.
"Bitcoin Pakistan," a community of like-minded technology and bitcoin enthusiasts in Pakistan, organized its first physical networking event in Lahore last month, in November. The interest in understanding bitcoin as an inflation hedge tool and a global payments network is increasing.
However, people in Pakistan are also afraid of the legality of cryptocurrency; many seem reluctant to talk publicly about it, fearing consequences from the authorities. There is a common misunderstanding that bitcoin is banned or illegal in Pakistan.
The Central Bank of Nigeria imposed a similar ban on cryptocurrency transactions through banks in 2021. However, after witnessing the increased demand for bitcoin and its usage in the country, the CBN lifted the ban in the latest circular, providing clear instructions.
The Central Bank of Nigeria stated:
"However, current trends globally have shown that there is a need to regulate the activities of virtual asset service providers (VASPs), which include cryptocurrencies and crypto assets."
In contrast, the State Bank of Pakistan, through its Circular issued in 2018, cautioned the public that cryptocurrencies are not legal tender, issued, or guaranteed by the Government of Pakistan. Moreover, the SBP clarified that it does not authorize or license any individual or entity for the issuance, sale, purchase, exchange, or investment in any such Virtual Currencies (VCs)/ Coins/ Tokens in Pakistan. Therefore, all regulated entities were advised to refrain from processing, using, trading, holding, transferring value, promoting, and investing in Virtual Currencies/ Tokens.
Bitcoin adoption, on the other hand, has increased significantly in Pakistan, even though there is no regulated exchange in the region. People use peer-to-peer services like Binance, Paxful, and other OTC trade methods to acquire bitcoin in Pakistan.
The number may not be precise, but it seems Pakistan is ranking among the top countries in bitcoin adoption rate in emerging markets in the developing world.
Pakistan's rapid adoption of bitcoin can also be explained when we look at the yearly inflation, which is exceeding 25% and has been worsening for the past few years amid political chaos and pressure from the International Monetary Fund (IMF).
The freelancing industry is thriving, and Pakistan is one of the top countries exporting IT services. The freelancers' community has shifted towards storing a major portion of their wealth in foreign currency such as USD or GBP, and the number of freelancers holding bitcoin or USDT as an inflation hedge has increased significantly since the COVID crisis.
Bitcoin is a revolution that can't be stopped; many other nations have realized it and are working to make regulations to keep up with the innovation in the digital world. With friendly regulations from the government and a strict crackdown on crypto frauds in Pakistan, doors can open for new opportunities and attract huge investments that can help lift Pakistan out of its debt crisis.
This is a guest post by Farooq Ahmed. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
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