Pakistan’s decision to legalize cryptocurrency in March 2025 marks a significant change in its financial policies. After years of restrictions and uncertainty, the government has introduced a regulated framework for digital assets. This move aligns with global trends, where nations are shifting from banning crypto to regulating it.
With this new legal framework, Pakistan aims to boost financial innovation, attract foreign investment, and create new economic opportunities. The decision also has implications for other Islamic nations, particularly those still uncertain about cryptocurrency regulations. Countries like Bangladesh, Iran, and Iraq may now feel pressure to reconsider their approach. If Pakistan successfully integrates cryptocurrency into its economy, it could set a precedent for other Muslim-majority nations, influencing their regulatory decisions.
Pakistan’s Shift from Restriction to Regulation
For years, Pakistan maintained a cautious stance on cryptocurrency due to concerns about fraud, money laundering, and lack of oversight. The State Bank of Pakistan (SBP) issued a directive in 2018, restricting financial institutions from facilitating crypto transactions. In 2023, Minister of State for Finance and Revenue Aisha Ghaus Pasha reinforced this stance, stating that cryptocurrency would “never be legalized in Pakistan.”
Despite these restrictions, government attitudes gradually shifted. By late 2024, officials proposed amendments to financial regulations that paved the way for crypto legalization. This policy shift culminated in March 2025, when the government officially announced the legalization of cryptocurrency, as reported by @WatcherGuru on March 20, 2025.
Pakistan’s decision is driven by economic necessity and global financial trends. Countries such as India, the UAE, and Singapore have already established crypto-friendly regulations. To remain competitive, Pakistan recognized the need to embrace blockchain technology and digital assets.
Why Crypto Legalization Matters for Pakistan
1. Establishing Trust and Legitimacy
One of the biggest challenges for crypto adoption has been legal uncertainty. By introducing clear regulations, Pakistan is creating an environment where investors, businesses, and developers can engage with digital assets without fear of legal repercussions. This will likely encourage wider participation in the crypto economy.
2. Attracting Foreign Investment and Economic Growth
With a population of over 250 million people, Pakistan has enormous potential for crypto-driven economic expansion. A significant portion of the population—60% under 30 years old—is already engaged in digital finance. Even before legalization, many Pakistanis were using peer-to-peer platforms like Binance and Paxful to trade cryptocurrencies. A regulated system will now encourage direct investment, foster blockchain innovation, and create jobs.
3. Aligning With Global Crypto Trends
Many governments now understand that banning cryptocurrency is ineffective. Instead, they are choosing regulation and oversight to ensure investor protection and financial stability. By legalizing cryptocurrency, Pakistan is aligning itself with countries that are embracing blockchain technology rather than fighting it.
Impact on Other Islamic Nations
Pakistan’s decision could influence other Islamic nations, particularly those that have strict regulations or outright bans on cryptocurrency. Many of these countries have economic and religious considerations when making financial policy decisions.
1. Bangladesh: A Potential Shift Toward Regulation?
In 2021, Bangladesh’s central bank banned financial institutions from dealing with cryptocurrency, citing risks such as money laundering and financial instability. However, with Pakistan now establishing a regulatory framework, Bangladesh may reconsider its stance.
- Current Status: Crypto remains heavily restricted in Bangladesh.
- Possible Change: The government might introduce a limited regulatory framework rather than maintaining a complete ban.
2. Iran: Strengthening Its Crypto Policy
Iran has a complicated relationship with cryptocurrency. While the government has banned crypto mining at times due to energy concerns, it also allows Bitcoin for international trade to bypass economic sanctions.
With Pakistan now offering clear regulations, Iran may choose to formalize its crypto policies to create a structured, government-controlled digital asset market.
- Current Status: Limited acceptance of crypto for trade, restrictions on mining.
- Possible Change: Iran could create an official legal framework for crypto transactions.
3. Iraq: Exploring Crypto for Economic Development
Iraq has not established a clear stance on cryptocurrency, but its struggling economy could benefit from digital asset adoption. If Pakistan demonstrates that regulated crypto can drive economic growth, Iraq may follow its lead.
- Current Status: No formal regulation or legal clarity on crypto.
- Possible Change: Iraq may introduce regulatory measures to attract investment and boost financial inclusion.
The Role of Sharia Compliance in Crypto Adoption
One of the most significant concerns in Islamic nations is whether cryptocurrency aligns with Sharia law. Scholars have debated whether digital assets are speculative (haram) or legitimate financial tools (halal).
Some Islamic scholars argue that crypto is too volatile to be halal, while others believe that it can be made compliant through proper regulation. Several Sharia-compliant crypto projects already exist, such as Islamic Coin (ISLM) on the Haqq blockchain, which follows Islamic financial principles.
If Pakistan integrates Sharia-compliant crypto regulations, it could pave the way for other Muslim-majority countries to adopt digital assets while maintaining religious financial ethics.
Was Pakistan Banning Crypto Just Before Legalization?
Contrary to speculation, Pakistan did not impose an official ban on cryptocurrency right before its legalization. While previous statements from government officials in 2023 strongly opposed crypto, by late 2024, the policy had already begun shifting toward regulation.
This means that Pakistan’s decision was not an overnight move but rather a gradual policy shift influenced by economic and global financial trends.
Final Thoughts: A New Era for Crypto in Islamic Nations?
Pakistan’s decision to legalize cryptocurrency represents a major turning point in the country’s financial history. By moving from restriction to regulation, the government is creating a more secure environment for digital asset investments. This shift will likely lead to greater adoption, economic growth, and blockchain innovation. If Pakistan successfully integrates cryptocurrency into its economy, it could position itself as a leader in digital finance within South Asia.
Beyond Pakistan, this decision could serve as a catalyst for other Islamic nations to reconsider their crypto policies. If Pakistan’s regulated crypto economy thrives, countries like Bangladesh, Iran, and Iraq may explore similar regulations. However, the debate on Sharia compliance will remain an essential factor in shaping future Islamic crypto policies. The coming years will determine whether Pakistan’s move sparks broader adoption or remains an isolated case.
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