The Central Bank of Pakistan (SBP) has proposed legalizing cryptocurrencies, issuing a digital rupee, and cutting interest rates by 2.5% to boost the economy.
On November 4, the SBP announced a groundbreaking package of policy proposals to legalize cryptocurrencies and digital assets, officially recognizing them as legal tender. The move, made during a meeting of the Monetary Policy Committee (MPC) chaired by Governor Jameel Ahmad, marks a major shift in Pakistan’s stance on digital assets.
Under the proposal, the SBP will be allowed to issue central bank digital currencies (CBDCs), most likely the digital rupee. At the same time, commercial banks could be licensed to provide digital payment services, facilitating transactions on blockchain, including buying and selling and trading cryptocurrencies. To keep a tight rein, the SBP also proposes to impose penalties on digital currency issuers operating without government approval.
The shift comes just months after the previous finance minister hinted at a possible ban on cryptocurrencies in May 2023. The appointment of Muhammad Aurangzeb, former CEO of Habib Bank Limited, as finance minister in March 2024 appears to have prompted the policy shift. If approved, the proposals would provide an important legal foundation for the cryptocurrency market in Pakistan, both promoting innovation and controlling risks.
Along with the cryptocurrency proposal, the MPC also decided to cut interest rates by 2.5%, reflecting Pakistan’s optimistic economic outlook. Citing a sharp decline in food inflation, stable oil prices, and no expected revision in gas prices or PDL, the MPC forecast real GDP growth in FY25 to range from 2.5% to 3.5%, higher than its previous assessment.
The reduction in interest rates combined with plans to legalize cryptocurrencies could provide a strong boost to the digital asset market in Pakistan. However, imposing penalties on unlicensed exchanges also shows that the SBP is committed to strictly regulating the sector, protecting investors and maintaining financial stability.