Pakistan Approves Establishment of Digital Assets Authority to Regulate Crypto Market

In a landmark decision to modernize Pakistan’s financial landscape, the Ministry of Finance has officially approved the creation of the Pakistan Digital Assets Authority (PDDA).

PDDA will oversee and regulate the country’s growing digital assets sector, focusing primarily on bringing order to the unregulated cryptocurrency market and protecting both local and international investors.

With this new regulatory body, the beginning of a broad-based government action is to come up with a well-structured and secure framework for regulating digital assets in Pakistan. This initiative would ensure that digital technologies for finance are applied responsibly and conform to international standards, including those from the Financial Action Task Force (FATF).

The Pakistan Digital Assets Authority will act as the central authority regulating various activities in the digital finance ecosystem, according to the Ministry of Finance. This includes cryptocurrency exchanges, digital wallets, custodial services, stablecoins, and decentralized finance (DeFi) platforms. Most importantly, the authority will promote the tokenization of public assets, such as government debt and infrastructure, for public financial management and its transparency.

The informal cryptocurrency market in Pakistan is valued above $25 billion, but, until now, it has worked informally without any oversight. Lack of regulation has posed risks to investors as well as to systemic financial risks. By regulating the market, the PDDA aims at building investor confidence and reducing instances of illegal or untraceable transactions.

Finance Minister Muhammad Aurangzeb highlighted that the creation of the PDDA signals a strategic shift in Pakistan’s economic approach. “With the establishment of PDDA, we aim to provide legal certainty, enhance investor protection, and promote financial inclusion, especially for our youth and underserved communities,” he said, emphasizing the country’s efforts to position itself as a key player in the global digital economy.

The officials also stated the PDDA would be investigating innovative applications for blockchain technology. With one of its far-reaching goals being to make use of excess electricity for Bitcoin mining (monetizing unutilized energy), there is also a greater emphasis to pocket the hop of assisting the younger population by creating blockchain-based applications that stimulate an environment of tech entrepreneurship.

This initiative aligns with global trends, taking inspiration from countries like Japan, Singapore, the UAE, and Hong Kong, which have already developed advanced regulatory frameworks to support the growth of digital assets.

With the establishment of the PDDA, Pakistan is on its way toward modernization in finance, thus redefining opportunities and building regulation for an industry that has been unregulated for years.