The Islamic Republic of Pakistan, the fifth densely populated country globally, has recently experienced rising cryptocurrency investments. It is estimated that approximately 5% of the Pakistans’ population currently owns cryptocurrencies.
According to a new research and report by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), the country’s top trade organization, cryptocurrencies, and property investments remain the best performing assets in 2021.
The rising popularity of cryptocurrencies
“Pakistanis own $20 billion in cryptocurrency in 2020-2021, an amount in excess of what the Central Bank has in Forex Exchange Reserves”, FPCCI reported.
Nasir Hayat Magoon, the FPCCI president, prompted the government to devise an integral regulation approach that enables the citizens to trade in cryptocurrencies instead of opting for other places like Dubai.
In his statement, he added that India had taken major steps in regulating crypto trading, and hence Pakistan should follow suit.
According to a report published by Chainalysis on October 14th, the country recorded an unusual increase of 711% in crypto investments in 2021, closely followed by India, at 641%.
This increase has made it one of the most influential crypto markets after the Middle East and European countries.
Besides, as per data issued by Chainalyis — a blockchain data platform — Pakistan was ranked 3rd this year in the Global Cryptocurrency Adoption Index after India and Vietnam.
Though the central bank, officially known as the State Bank of Pakistan, has not issued any statement regarding the FPCCI’s findings, the federation has urged for a national crypto strategy to properly regulate the new financial ecosystem.
The framework will safeguard Pakistan’s economic interests at the earliest, and minimize crypto vulnerabilities.
A potential crypto hub?
Khyber Pakhtunkhwa, Pakistan’s North Western Province, passed a decision to legalize cryptocurrency trading in December 2020 and created an advisory body in March 2021. However, the ultimate legalization decision lies with the federal government.
Despite the regulation’s absence, Pakistanis chose to venture into crypto trading. The business was seen to thrive during the coronavirus pandemic.
Pakistanis mostly trade with Binance, the largest global crypto exchange by daily trading volume.
Other popular crypto platforms include; Binomo and LocalBitcoins among others.
Approximately 67% of the investors in the country use centralized services, with the remaining 33% using decentralized financial platforms for cryptocurrency transactions.
Several citizens purchase coins through a peer-to-peer platform, where buyers transfer funds directly to sellers. Service providers act as intermediaries offering escrow services to cover counterparty credit risks.
Most of these peer-to-peer deals remain unreported; hence Pakistan’s actual comprehensive crypto holdings could be more than the FPCCI data reported.
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