According to fresh research studies, cryptocurrencies and property remained top performing assets in Pakistan throughout the previous year, with the country registering about $20 billion in bitcoin worth in 2021, an amount greater than current federal reserves.
In 2018, Pakistan’s central bank announced that virtual currencies such as Bitcoin were neither legal money nor guaranteed by the government. Despite the fact that cryptocurrencies are not recognised by the State Bank of Pakistan (SBP), interest in them is growing.
After India and Vietnam, the country ranked third in the worldwide crypto adoption index in 2020-21.
The Federation of Pakistan Chamber of Commerce and Industry (FPCCI), the country’s leading trade organisation, said in a new research estimate that the country’s cryptocurrency worth reached over $20 billion in 2020-21, an abnormal increase of 711 percent.
So yet, the central bank has been silent on FPPCI’s findings.
Retail investor flood, large leverage availability, and low transaction costs helped cryptocurrency grow during the coronavirus outbreak, according to FPCCI.
“Binance, based in Cayman Island, is the most popular cryptocurrency exchange among Pakistani investors,” according to the chamber’s report. “Other well-known platforms include Localbitcoins.com, Binomo, and others.”
In Pakistan, almost 67% of crypto investors use centralised services, while just 33% use decentralised finance (DeFi) platforms for crypto transactions. Buyers transmit money directly to sellers in the peer-to-peer model for investing in cryptocurrencies, while service providers operate as intermediaries and provide escrow services to mitigate counterparty credit risk.
Due to the SBP’s prohibition on financial institutions operating under its cover, traditional international payment methods including debit and credit cards cannot be utilised to purchase these currencies.
According to the FPCCI research, most investors use bank transfers or alternative methods such as JazzCash or EasyPaisa for this purpose.
While the province of Khyber Pakhtunkhwa in Pakistan’s northern Khyber Pakhtunkhwa unanimously passed a resolution to legalise cryptocurrency in December 2020 and constituted an advisory group in March 2021, it recognised that the federal government had the final say on digital money.
The FPCCI has called for a national cryptocurrency policy, claiming that a solid regulatory framework should be in place as soon as to ensure that people’s economic interests are protected and that the new system’s vulnerabilities are minimised.
More than 5,000 distinct cryptocurrencies are in use around the world. Blockchain technology, which is a decentralised ledger of all transactions over a peer-to-peer network, underpins these virtual or digital currencies.
“Among the key asset classes used by local investors, cryptocurrency and real estate remained the highest performing asset classes in Pakistan in 2021,” according to a report released on Friday by Topline Securities, a large brokerage house in Karachi.
