Pakistan Loses $600 Million to Illegal Crypto Transactions, Dollar Outflows Rise

Highlights:

• Pakistan lost millions of dollars this year as illegal crypto transactions surged.
• Dollar sales to banks dropped sharply, but commercial reserves increased despite slow inflows.
• Pakistan is advancing crypto rules, inviting global exchanges, and joining the WEF’s steering committee.

Pakistan lost over $600 million this year due to illegal cryptocurrency transactions. This has reduced the flow of dollars into the banking system. Many people now buy dollars from exchange companies to invest in crypto illegally. “Last year, we sold banks about $4 billion in the first 10 months,” said Malik Bostan, Chairman of the Exchange Companies Association of Pakistan. He added that most of these missing dollars were invested in cryptocurrencies. Bostan explained that dollars purchased from exchange companies are first deposited in foreign currency accounts. They are then withdrawn and converted into digital assets illegally.

Pakistan loses $600 million to illegal cryptocurrency transactions this year, leading to a 23% drop in dollar inflows to banks as buyers divert cash into unregulated crypto channels. https://t.co/1oU2glWbgm

— Investify Pakistan (@investifypk) November 22, 2025

Dollar Outflows Rise Despite Pakistan’s Struggles to Control Illegal Crypto Transactions

From January to October this year, Pakistanis kept about $400 million in foreign currency accounts. Over $600 million left the country without a trace. The State Bank of Pakistan recently told banks and exchange companies not to give cash dollars. Instead, they must transfer money directly into FCY accounts. Under this rule, exchange companies now issue cheques or transfer funds straight to users’ accounts. However, Malik Bostan said these dollars are still used to buy cryptocurrencies. Dollar sales to banks have fallen sharply, despite tight border controls with Afghanistan and Iran.

Dollar sales to banks weakened further in the first four months of the current fiscal year. Exchange companies sold $280 million in July, $163 million in August, $186 million in September, and $244 million in October. All these figures were lower than the same months last year. From July to October, total sales dropped to $873 million in 2025 from $1.139 billion last year. This shows a 23% decline. Despite these slow inflows, commercial banks’ dollar holdings still increased. Their reserves rose from $4.180 billion in January to $4.625 billion.

Pakistan has faced a long-standing shortage of dollars and was near default two years ago. After an IMF bailout, the country imposed import restrictions to reduce trade and current account deficits. Authorities also cracked down on illegal trading and dollar smuggling. While traditional illegal trading is under control, rising crypto investments could still drain dollars. Commercial banks’ dollar holdings have increased, even as sales from exchange companies fell. This shows tighter management of available reserves.

Pakistan Moves Ahead in Crypto Regulation

Pakistan is also advancing its digital finance plan by welcoming international crypto exchanges to apply for local licenses. Bilal Bin Saqib, Pakistan Virtual Asset Regulatory Authority (PVARA) chairman and state minister for crypto and blockchain, said the country wants to work with these companies to create a clear and transparent digital finance system.

🚨 PAKISTAN INVITES GLOBAL CRYPTO FIRMS TO APPLY FOR LICENSES

Pakistan ranks 3rd in global CRYPTO adoption, right behind INDIA at #1.

But with India’s hash tax and unclear laws choking the industry, how long before that ranking slips? ⏳ pic.twitter.com/I9WDnOt4Up

— Wise Advice (@wiseadvicesumit) September 14, 2025

Moreover, Pakistan has gained a place in global rule-making for cryptocurrencies and blockchain. Bilal Bin Saqib has joined the World Economic Forum’s Steering Committee on Digital Asset Regulations. The finance ministry announced this on Thursday. Pakistan is also working on its first rules for virtual assets. The government says these rules are needed to protect users, support stability, and follow global standards. Saqib’s role in the WEF committee shows Pakistan is entering high-level global talks. This comes as major countries are setting formal rules for cryptocurrencies and tokenized assets. 

Federal Minister for @Financegovpk Senator Muhammad Aurangzeb paid his first official visit to Pakistan Virtual Asset Regulatory Authority (PVARA) today, receiving a comprehensive briefing on Pakistan’s upcoming regulatory framework for virtual assets.

PVARA leadership shared… pic.twitter.com/es7oi77UgL

— Ministry of Finance, Government of Pakistan (@Financegovpk) November 20, 2025