On May 30, 2025, the State Bank of Pakistan (SBP) issued a statement that should have ignited a national debate. Instead, it was received with relief.
Carefully measured PROSA clarified SBP that its circular banks in 2018 limit banks and financial service providers from working with virtual assets (VAS) such as cryptocurrencies did not actually constitute a ban.
It simply instructed “regulated devices” to refrain from crypto-related business pending the development of a legal framework.
The statement also emphasized that it had never declared Cryptocurrencies “illegal,” a clarification aimed at correcting what it called “inaccurate interpretations”. At first glance, this statement seems to be a progressive pivot, a subtle step towards rationalization of digital asset policy in Pakistan.
But for any serious student in constitutional law, regulatory theory or economic 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 in which national politics is not formed in parliament but in PDF files uploaded to institutional sites, such as SBP.
Let’s be brutally clear: SBP’s clarification does not legalize crypto. It doesn’t regulate it. It does not protect consumers. It does not define obligations, creates obligations or determines rights. It simply changes the grammar in the regulatory vacuum that already exists. What was once seen as a “ban” is now framed as a “break”. But a legislative break that lasts over six years, without legislation, advisory white papers and parliamentary debate, is no restraint. It’s abdication – and this abdication is not harmless. It is constitutional.
Pakistan’s economic regulators, including SBP and Securities and Exchange Commission of Pakistan (SECP), derive their powers from delegated authority, not divine right. The power to create law belongs to parliament and is codified in Article 142 of the Constitution.
SBP is authorized to enforce laws, not to invent them. By issuing a clarification that implicitly re -characterizes the legal status of an entire asset class without any reference to an activating statute, SBP has once again demonstrated what scholars of postcolonial governance have long complained: that in Pakistan rules the state rules more often by notification than by legislation.
What does that mean for the citizen? This means that ordinary people, tech entrepreneurs, freelancers, crypto mine workers and transfer processors have operated under legal fog for six years. They have seen when their bank accounts were frozen, their mobile wallets marked, and their exchanges were shut down, all on the strength of a document that had no binding legal strength beyond its legislative boundaries, and now, with a press release, the same document is interpreted to suggest that the state never surpassed anything at all.
This is more than legal inconsistency, but institutional gas lighting.
Between 2018 and 2024, Pakistani authorities reportedly froze over 11,000 bank accounts associated with cryptocurrency transactions. In 2021 alone, the Federal Investigation Agency (FIA) freed the accounts of 1,064 persons involved in crypto trade, treatment of transactions worth approx. RS51 million (about $ 288,000) through platforms such as Binance and Coinbase.
Despite the absence of explicit legal ban on crypto ownership or trade, these enforcement measures were based almost exclusively on SBP’s 2018 circular, which only advised financial institutions to avoid cryptor-related activity pending future regulation.
The deeper constitutional failure here is not in SBP’s actions alone, but in the complete absence of legislative commitment. In jurisdictions with comparable legal traditions, such as India, Britain and the EU, questions about digital assets have become questions about parliamentary urgency. The Indian Parliament has repeatedly discussed the status of crypto, even presented draft legislation.
The European Union has adopted Landmark Mica regulation, a regulation of 400 pages that licenses crypto providers, protect consumers and adapt to FATF guidelines. Even China and Russia have passed formal legislation, either to ban crypto directly or to regulate it within national security parameters.
In contrast, Pakistan has done nothing. There is no bill on digital assets. There is no policy paper circulated for public consultation. There is no parliamentary standing selection for blockchain or fintech. There is no Inter-Agency Protocol to determine which state institution owns the Crypto question-BP, SECP, FBR or Moitt. In fact, there is no clear national vision at all.
The only political document in circulation is a work group draft from 2021 that collects dust in institutional inboxes. Now, into this vacuum, Pakistan Crypto Council, an organ is reportedly tasked with helping the government develop its crypto timetable. Among its recent messages is a proposal to create a “strategic Bitcoin reserve”.
If this sounds like a parody of the policy, it’s because it is. How can a country without a legal framework, licensing regime and custodian infrastructure entertain the idea of placing public funds in an unstable, decentralized, unregulated digitally asset? This is not only bad financial judgment. It is potentially constitutional behavior.
Public funds in Pakistan are governed by Articles 78 to 84 of the Constitution and the Act on Fiscal Responsibility and Debt Restriction, 2005. This framework requires all federal government expenditure, reserves or financial possessions to be subject to parliamentary grant, auditing of audit general and reporting to the public account committees.
There is no provision under which the federal government or any of its agencies can invest national wealth in an unstable digitally asset such as Bitcoin without clear statutory authority. Any attempt to do this would constitute an illegal transfer of public risk to private platforms and a violation of trust obligations due to the Pakistani public. Still, 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 law on the management of digital assets-a comprehensive, multiple sector’s framework that defines what digital assets are, how they are classified (product, currency, security, property), which is licensed to treat them, what taxes apply, how currency currents are regulated, how AML/CFT protocols are allowed, and what is right, in order to be scammed, loss, or or or or or cybercrime. This law should not be introduced by bureaucrats, but by MPs. It must undergo public consultation. It must be discussed, revised, adopted and owned by the democratic process. Something less than it is not reform. It’s an illusion.
SBP’s clarification is therefore not just a crayo statement. It is a mirror that is held up to the state that reveals a government structure that remains more comfortable with advisers than accountability. It tells us that in the most basic questions of economic sovereignty we have built a regulatory state without a republic.
If Pakistan is to be serious with economic modernization, it must first be serious with constitutional modernization. It must be remembered that law is not a proposal. It is the lifeblood of a republic and no quantity of clarification can replace legislation.
Until this lesson is learned, each press release we issue will be just that: a note. Typed. Sent. Forgotten. But the law remembers what the people do not. And one day it returns to an account.
The author is the director of the Center for Law, Justice & Policy (CLJP) at Denning Law School. He has an LLM in negotiation and dispute resolution from Washington University.
Disclaimer: The views expressed in this piece are the author’s own and does not necessarily reflect Pakinomist.tv’s editorial policy.
Originally published in the news
