The concept of incorporating Bitcoin into national reserves has recently gained momentum, particularly after former US President Donald Trump endorsed it at the Bitcoin Conference in Nashville.
Trump pledged that, if re-elected, he would ensure the federal government retains its Bitcoin holdings and does not sell them off.
This endorsement has sparked a lively discussion in Pakistan, where influential voices, including crypto expert Waqar Zaka, are advocating for Bitcoin as a potential solution to the country’s debt crisis. Pakistan’s economic situation is challenging, with a significant shortfall in external debt. The Economic Affairs Division recently reported that Pakistan secured only $9.81 billion in external debt last fiscal year, falling short of the $17.61 billion projection. This shortfall highlights the need for innovative financial solutions.
In an exclusive interview with Samaa Digital, Waqar Zaka, Chairman of the Technology Movement Pakistan and a leading crypto expert, reiterated his long-standing position. “Back in 2015, when Bitcoin was valued at just $258, I proposed that cryptocurrencies be used as reserves similar to gold to help manage Pakistan’s debt. Although I faced criticism, this idea now seems more relevant,” Zaka stated.
Zaka believes Trump’s recent support further validates his view on Bitcoin’s potential to stabilize economies. He has advocated for Bitcoin’s integration into Pakistan’s financial strategy through his YouTube channel and legal initiatives. Notably, Zaka successfully argued as his own lawyer in petition CP 7146/2019, leading to a significant December 2020 observation by the Sindh High Court that the State Bank could not ban cryptocurrencies.
He was later appointed to Pakistan’s first crypto regulatory body, working alongside the SECP and the State Bank. Zaka pointed out that Pakistan has over 20 million registered crypto accounts, nearly matching the number of traditional bank accounts, indicating strong public interest in digital assets.
The idea of using Bitcoin as a national reserve is not unprecedented. For example, India has regulated its cryptocurrency industry by imposing a 30% tax on crypto gains, akin to capital gains on shares. This regulatory framework provides a structured environment for crypto trading and taxation, a model Pakistan could consider.
To effectively harness cryptocurrencies, Pakistan could implement several measures:
- Regulate Crypto Exchanges: Require exchanges to obtain licenses from the proposed Pakistan Digital Asset Board (PDAB) and deposit a non-refundable security of USD 10 million for customer protection and operational integrity.
- Stablecoin Regulations: Ensure stablecoin operators, like USDT and USDC, back their digital assets with an equivalent amount of Pakistani Rupees in national reserves.
- Compliance with International Standards: Mandate adherence to the FATF Travel Rule, with real-time reporting of cross-border transactions and comprehensive KYC details.
- Crypto Mining Policies: Restrict cryptocurrency mining to hydroelectric power, with penalties for using other power sources.
- Asset Declaration: Require all entities and individuals to declare their digital assets by registering wallet addresses on a designated government website, with penalties for non-compliance.
- Educational Initiatives and Public Awareness: Launch educational programs through PDAB and PTV to train individuals in cryptocurrency trading and blockchain technology.
Additionally, unauthorized transfers of funds outside Pakistan detected by monitoring systems would incur a penalty of up to three years in jail to prevent illegal financial flows and protect national economic interests.
By implementing these measures, Pakistan could create a secure environment for cryptocurrency trading, attract significant investments, and contribute to managing its debt crisis.
