Pakistanis own cryptocurrencies more than federal reserves: report

KARACHI: Pakistanis have owned cryptocurrencies and property worth $20 billion, more than the current federal reserves as both mediums remained top-performing assets in Pakistan in 2021.

“Pakistan recorded around $20 billion of cryptocurrency value in 2020-21, showing an abnormal increase of 711 per cent,” the Federation of Pakistan Chamber of Commerce and Industry, the country’s top trade body, said in a new research report.

Pakistan ranked third in the Global Crypto Adoption Index in 2020-21 after India and Vietnam.

The report indicated increased interests of Pakistanis in cryptocurrencies especially during coronavirus pandemic despite the State Bank of Pakistan (SBP) declaring in 2018 that cryptocurrencies including Bitcoin were not legal tender issued or guaranteed by the government.

Traditional international payment instruments, such as debit and credit cards, cannot be used for the purchase of these currencies due to the SBP’s prohibition on financial institutions under its umbrella.

It further stated that the biggest crypto exchange used by Pakistani investors is Binance, which is headquartered in Cayman Island, whereas other renowned platforms include Localbitcoins.com, Binomo and others.

Centralized services are being used by about 67 per cent of crypto investors in Pakistan, whereas, only 33 per cent use decentralized financing platforms for crypto-related transactions.

The peer-to-peer model for investing in cryptocurrencies works in a way that buyers transfer money directly to sellers, whereas service providers act as intermediaries and provide escrow services to hedge counterparty credit risks, Arab News reported.

According to FPCCI, bank transfers or other means including mobile cash transfer services of cellular companies are used to purchase by the investors.