On May 30, 2025, the State Bank of Pakistan (SBP) issued a statement that should have turned on a national debate. Instead, he was received with relief.
In carefully measured prose, the SBP clarified that its 2018 circular banks that banks and financial service providers restrict to participate with virtual assets (VA), such as cryptocurrencies, in fact they did not constitute a prohibition.
He simply instructed the “regulated entities” that are refrained from business related to cryptography waiting for the development of a legal framework.
The statement also emphasized that he had never declared “illegal” cryptocurrencies, a clarification aimed at correcting what he called “inaccurate interpretations.” At first glance, this statement seems to be a progressive pivot, a subtle step towards the rationalization of digital asset policy in Pakistan.
But for any serious constitutional law, regulatory theory or financial governance, this clarification is not a step forward, it is an admission of failure. It reflects the normalization of a dangerous legal culture in Pakistan: one where national policy is not formed in Parliament but in PDF files loaded on institutional websites, such as SBP.
Let’s be brutally clear: the clarification of the SBP does not legalize cryptography. Do not regulate it. It does not protect consumers. Do not define obligations, create liabilities or establish rights. Simply change the grammar of the regulatory vacuum that already exists. What was once seen as a “prohibition” is now framed as a “pause.” But a regulatory pause that lasts more than six years, without legislation, white advisory documents and parliamentary debate, is not a restriction. It is an abdication, and this abdication is not harmless. It is unconstitutional.
The financial regulators of Pakistan, including the SBP and the Pakistan Stock Exchange and Securities Commission (SECP), derive their powers from the delegated authority, not the divine law. The power to create law belongs to Parliament and is coded in article 142 of the Constitution.
The SBP is empowered to enforce the laws, not to invent them. By issuing a clarification that implicitly collects the legal status of an entire asset class without any reference to an enabler statute, the SBP has once again demonstrated what academics in post -colonial governance have lamented for a long time: that in Pakistan, the State governs most frequently by notification than by legislation.
What does this mean for the citizen? It means that common people, technological entrepreneurs, independent workers, cryptographic miners and remittance processors have operated under legal fog for six years. They have observed how their bank accounts were frozen, marked their mobile wallets and their exchanges closed, all about the force of a document that had no binding legal force beyond its regulatory limits, and now, with the blow of a press release, that same document is reinterpreting to suggest that the State never banned anything at all.
This is more than legal inconsistency, but institutional lighting.
Between 2018 and 2024, the Pakistani authorities froze more than 11,000 bank accounts linked to cryptocurrency transactions. Only in 2021, the Federal Research Agency (FIA) froze the accounts of 1,064 people involved in the cryptocurrency trade, processing transactions worth approximately RS51 million (around $ 288,000) through platforms such as Binance and Coinbase.
In spite of the absence of any explicit legal prohibition on the property or trade of cryptography, these compliance actions were almost completely based on the 2018 circular of SBP, which simply advised the financial institutions to avoid the activity related to cryptographic waiting for future regulation.
The deepest constitutional failure here is not only in the actions of the SBP but in the complete absence of legislative commitment. In jurisdictions with comparable legal traditions, such as India, the United Kingdom and the EU, the issues of digital assets have become matters of parliamentary emergency. The Indian Parliament has repeatedly discussed the status of cryptography, even presenting a bill.
The European Union has promulgated historical mica regulation, a 400 -page regulatory framework that license to cryptography suppliers, protects consumers and aligns with FATF guidelines. Even China and Russia have approved formal legislation, either to prohibit cryptography directly or to regulate it within national security parameters.
Pakistan, in contrast, has done nothing. There is no digital asset invoice. There is no distributed policy document for public consultation. There is no permanent parliamentary committee on Blockchain or Fintech. There is no protocol between agencies to determine which state institution has the cryptographic question: SBP, SECP, FBR or MOITT. In fact, there is no clear national vision at all.
The only policy in circulation is a draft of the 2021 working group, collecting dust on institutional entry trays. Now, in this void, the Crypto Council of Pakistan, an agency, according to reports, in charge of helping the government to develop its cryptographic roadmap. Among its recent ads is a proposal to create a “Bitcoins Strategic Reserve”.
If this sounds like a politics parody, it is because it is. How can a country without legal framework, license regime and custody infrastructure entertain the idea of placing public funds in a volatile, decentralized and unregulated digital asset? This is not just a bad financial judgment. It is a potentially unconstitutional behavior.
Public funds in Pakistan are governed by articles 78 to 84 of the Constitution and the Law of Limitation of Responsibility and Debt of Debt, 2005. These frameworks require that all expenses of the federal government, reservations or financial holdings must be subject to parliamentary appropriation, audit by the General Auditor and inform the Public Accounts Committee.
There is no disposition under which the federal government or any of its agencies can invest national wealth in a volatile digital asset such as Bitcoin without a clear legal authority. Any attempt to do so would be equivalent to an illegal transfer of public risk to private platforms and a violation of fiduciary duties owed to the Pakistani public. However, the SBP remains silent. The Ministry of Finance is mute. Parliament is missing.
What is needed is not a clarification. What is needed is a constitutional calculation.
Pakistan must immediately initiate a national process to create a Digital Asset Government Law: an integral and multisectoral framework that defines which digital assets are, how they are classified (basic products, currency, security, property), which has a license to treat in them, what taxes are applied, how currency flows are regulated, how the protocols of AML/CFT are included, and what is judged to Judges cybercrime. This law must be introduced not by bureaucrats, but by members of Parliament. You must submit to a public consultation. It must be discussed, reviewed, approved and owned by the democratic process. Anything less than that is not a reform. It is an illusion.
The clarification of the SBP, then, is not simply a statement about cryptography. It is a sustained mirror to the State, revealing a government structure that remains more comfortable with warnings than responsibility. It tells us that in the most fundamental issues of economic sovereignty, we have built a regulatory state without a republic.
If Pakistan takes financial modernization seriously, it must first be serious about constitutional modernization. It should be remembered that the law is not a suggestion. It is the soul of a republic, and no amount of clarification can replace the legislation.
Until that lesson is learned, every press release that we issue will be just that: a note. Written. Aware. Forgotten But the law remembers what people don’t. And one day, he will return for accounting.
The writer is the director of the Center for Law, Justice and Politics (CLJP) of the Faculty of Law of Denning. It has a LLM in the negotiation and resolution of disputes of the University of Washington.
Discharge of responsibility: The views expressed in this piece are that of writer and do not necessarily reflect the editorial policy of PakGazette.TV.
Originally published in the news
