On May 30, 2025, the State Bank of Pakistan (SBP) published a statement that should have ignited a national debate. Instead, it was received with relief.
In carefully measured prose, the SBP said that its 2018 circular circular banks and its financial service providers engage with virtual assets (EVA) such as cryptocurrencies did not actually be a ban. He simply asked the “regulated entities” to refrain from the company linked to the crypto pending the development of a legal framework.
The declaration also stressed that it had never declared “illegal” cryptocurrencies, a clarification aimed at correcting what it called “inaccurate interpretations”. At first glance, this declaration seems to be a progressive pivot, a subtle step towards the rationalization of the policy of digital assets in Pakistan. But for any serious student in 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 shaped not in Parliament but in PDF files downloaded on institutional websites, such as that of SBP.
Let us be brutally clear: the clarification of the SBP does not legalize the crypto. He does not regulate it. It does not protect consumers. It does not define the obligations, does not create liabilities or does not establish rights. It simply changes the grammar of the regulatory vacuum which already exists. What was once considered a “prohibition” is now considered a “break”. But a regulatory break lasting more than six years, without legislation, advisory white buses and a parliamentary debate, is not a deduction. It is abdication – and this abdication is not harmless. It is unconstitutional.
Pakistan financial regulators, including SBP and Securities and Exchange Commission of Pakistan (SECP), draw their powers from the delegated authority, not from divine law. The power to create the law belongs to Parliament and is codified in article 142 of the Constitution. The SBP is empowered to apply the laws, not to invent them. By issuing a clarification which implicitly restarts the legal status of an entire asset class without any reference to a empowering status, the SBP again demonstrated what the scholars of post-colonial governance have long deplored: that in Pakistan, the State is more often adjusted by notification than by legislation.
What does this mean for the citizen? This means that ordinary people, technological entrepreneurs, freelancers, crypto minors and fundraising operators have worked under legal fog for six years. They saw that their bank accounts were frozen, their mobile portfolios reported, their exchanges stop, all on the strength of a document that had no binding legal force beyond its regulatory limits, and now, with a press note, this same document is reinterpreted to suggest that the state has never prohibited anything. It is more than a legal inconsistency, but institutional gas light.
Between 2018 and 2024, the Pakistani authorities would have frozen more than 11,000 bank accounts related to cryptocurrency transactions. In 2021 alone, the Federal Investigation Agency (FIA) frozen accounts of 1,064 people involved in the Crypto trade, the processing of transactions worth around 51 million rupees (around $ 288,000) thanks to platforms like Binance and Coinbase. Despite the absence of any explicit legal ban on the property or trade in cryptography, these application measures were founded almost entirely in the 2018 SBP circular, which simply advised financial institutions to avoid activities related to cryptography pending future regulations.
The deeper constitutional failure does not reside here no in the actions of the SBP but in the total absence of legislative engagement. In the courts with comparable legal traditions, such as India, the United Kingdom and the EU, the questions of digital assets have become questions of parliamentary emergency. The Indian Parliament has repeatedly debated crypto status, even by translating a bill. The European Union has promulgated the Landmark Mica regulation, a 400 -page regulatory framework that allowed crypto providers, protects consumers and aligned with FATF directives. Even China and Russia have adopted official legislation, either to prohibit cryptography or regulate it in national security parameters.
Pakistan, however, did nothing. There is no digital asset bill. There is no political document disseminated for public consultation. There is no permanent parliamentary committee on blockchain or fintech. There is no interinstitutions protocol to determine which state institution has the question of the crypto – SBP, SECP, FBR or Moitt. In fact, there is no clear national vision.
The only political document in circulation is a 2021 working group project, bringing together dust in institutional reception boxes. Now, in this void, Pakistan Crypto Council, an organization would have been responsible for helping the government to develop its cryptographic roadmap. Among his recent announcements is a proposal to create a “Bitcoin Strategic Reserve”. If it looks like a parody of politics, it is because it is. How can a country without legal framework, can license regime and guardian infrastructure entertain the idea of placing public funds in a volatile, decentralized and unregulated digital asset? It is not only bad financial judgment. It is potentially unconstitutional behavior.
Public funds in Pakistan are governed by articles 78 to 84 of the Constitution and the 2005 law on tax liability and the limitation of debt. There is no provision under which the federal government or one of its agencies can invest national wealth in a volatile digital asset such as Bitcoin without clear statutory authority. Any attempt to do so would be equivalent to an illegal transfer of public risk to private platforms and a violation of fiduciary obligations due to the Pakistani public. However, the SBP remains silent. The Ministry of Finance is silent. Parliament is missing.
What is necessary is not a clarification. What is necessary is a constitutional calculation. Pakistan must immediately initiate a national process to create a law on the governance of digital assets – a complete and multisectoral framework which defines digital assets, how they are classified (goods, currencies, security, goods), which is authorized to deal with it, what taxes apply, the way in which cybercrime exchange flows. This law must be introduced not by the bureaucrats, but by the members of the Parliament. He must undergo a public consultation. It must be debated, revised, adopted and held by the democratic process. Nothing less than that is not a reform. It is an illusion.
Clarification of the SBP is therefore not just a statement on the crypto. It is a mirror held in the State, revealing a governance structure that remains more comfortable with the advice than responsibility. He tells us that in the most fundamental questions of economic sovereignty, we have built a regulatory state without a republic. If Pakistan must be serious about financial modernization, it must first be serious about constitutional modernization. He must remember that law is not a suggestion. It is the vital element of a Republic, and no clarification can replace the legislation.
Until this lesson is learned, each press note that we make will only be that: a note. Tapped. Posted. Forget. But the law remembers what people do not do. And one day, he will come back for accounting.
The writer is the director of the Center for Law, Justice & Policy (CLJP) at Denning Law School. He holds an LLM in negotiations and resolution of disputes from the University of Washington.
