$600m lost to illegal crypto transactions in Pakistan

Pakistan is facing a quiet but serious financial leak. Recent reports suggest that around $600 million has flowed out of the country through illegal crypto transactions, bypassing the formal banking system and existing regulations. In an economy already battling inflation, dollar shortages, and pressure from international watchdogs, this unregulated cryptocurrency outflow is more than just a tech story – it is a national economic and security concern.

Cryptocurrency use remains officially banned, yet millions of Pakistanis still trade through informal channels, offshore exchanges, and peer-to-peer (P2P) markets. This contradiction between policy and reality has turned Pakistan into a hotbed for illegal crypto transactions, capital flight, and scams.

In this article, we will unpack how this $600m loss to illegal crypto transactions in Pakistan emerged, why so many people are willing to bypass the law, how the regulatory landscape is changing, and what ordinary users must understand to protect themselves and stay compliant.

The $600 Million Question: What’s Really Happening?

How the $600m Loss Was Estimated

Why These Transactions Are Classified as “Illegal”

It is important to understand that, under current rules, most cryptocurrency buying, selling, and trading is illegal in Pakistan. The State Bank of Pakistan (SBP) and the federal government have repeatedly clarified in parliament and through public notices that digital currencies are not recognized and cannot be used legally through local financial channels.

This means that when dollars are sent abroad, converted into stablecoins or other crypto assets, and moved through offshore exchanges without reporting, they are classified as illegal foreign exchange and illegal crypto transactions. In many cases, these flows also raise concerns related to money laundering or terror financing.

Why Pakistanis Still Trade Crypto Despite the Ban

A Nation of High Crypto Adoption – Even Under a Ban

Despite the ban, Pakistan remains one of the world’s most active markets for digital assets. Reports have estimated tens of millions of Pakistani users and billions of dollars in annual crypto transaction volume, much of it in the informal or underground economy.

Legal Status: Is Crypto Really Illegal in Pakistan?

SBP’s Official Line: Crypto is Banned

Multiple official statements confirm that cryptocurrencies are banned in Pakistan. The State Bank of Pakistan and the Ministry of Finance have:

As a result, any crypto exchange operating within Pakistan without a license, any local account funding crypto purchases, or any mining operation connected to the grid is considered to be part of illegal crypto activity.

A Confusing Reality: Strategic Bitcoin Reserve and Crypto Council

At the same time, the government has sent mixed signals. On one hand, SBP continues to say crypto use is illegal; on the other, the government has:

This contradiction deepens confusion. Ordinary citizens see the state building Bitcoin reserves and virtual asset regulators, yet they are told that their own crypto transactions in Pakistan remain illegal. This gap between policy and practice has contributed to the rise of P2P markets and unregulated investment schemes.

How Illegal Crypto Transactions Move Money Out of Pakistan

The Role of Hawala, Hundi, and P2P Crypto

Historically, Pakistan has struggled with informal money transfer channels, including hawala and hundi. Crypto has added a new layer to this old problem. Now, instead of using only cash or bank drafts, some operators:

These illegal crypto transactions in Pakistan allow users to bypass documentation, taxation, and foreign exchange regulations, making it very difficult for authorities to track the true scale of capital flight.

Criminal Scams, Fraud, and the Human Cost

From Ponzi Schemes to Fake Trading Platforms

Wherever there is unregulated money, criminals follow. Pakistan has already seen several major crypto scams, including Ponzi schemes and fake investment platforms that promise unrealistically high returns. In some earlier cases, thousands of people lost life savings in fraudulent schemes linked to digital currencies.

Because crypto trading is illegal and unregulated, victims often have little legal recourse. They cannot easily sue based on contracts that involve banned activities, and law enforcement can struggle to trace masterminds who hide behind fake identities, offshore wallets, and VPNs.

Regulatory Crackdowns and New Laws: What’s Changing?

Court Orders and Enforcement Drives

Facing rising fraud and capital flight, Pakistani authorities have begun to respond more aggressively. Recent actions include:

These moves show that authorities now recognize that illegal crypto transactions in Pakistan are no longer a fringe issue but a systemic threat to financial stability.

Virtual Assets Bill and PVARA: A Path to Legalization?

Alongside crackdowns, there is also a policy shift. The government has introduced a Virtual Assets Bill 2025 and created the Pakistan Virtual Assets Regulatory Authority (PVARA) to license and supervise crypto and digital asset service providers.

This transitional phase is precisely when $600m in illegal crypto flows is most dangerous, as users feel the system is changing but lack clear guidance.

Economic Impact: Why $600m Matters for Pakistan

Pressure on Foreign Exchange Reserves

For a country struggling to maintain adequate foreign exchange reserves, losing hundreds of millions of dollars through illegal crypto transactions is a serious blow. Every dollar that leaves through unregulated channels:

In other words, the $600m lost to illegal crypto transactions in Pakistan does not sit in a vacuum; it directly interacts with petrol prices, electricity bills, and the cost of imported food.

Lost Tax Revenue and Shadow Economy Growth

A regulated framework, by contrast, could integrate crypto into the formal economy and turn some of these losses into taxable income, provided enforcement is strong and transparent.

How Ordinary Pakistanis Can Stay Safe and Compliant

Understand the Law Before You Trade

Be Extremely Cautious With “Crypto Investment” Offers

If someone guarantees fixed returns, pressure-sells an investment package, or claims to have “inside” strategies, treat it as a red flag. Past scams show that even platforms that look professional can collapse overnight, leaving investors with nothing. If it involves unregistered, illegal crypto transactions in Pakistan, the risk is far higher than any potential reward.

The Road Ahead: From Chaos to Compliance?

Pakistan stands at a crossroads. On one side is a banned, underground crypto market that has already contributed to an estimated $600m loss through illegal transactions, capital flight, and fraud. On the other side is a potential future with regulated virtual assets, licensed exchanges, and clear rules under bodies like PVARA and the Pakistan Crypto Council.

For now, the message is clear. Users who jump in without understanding this reality may find themselves on the wrong side of both the law and the market.

Conclusion

The story of $600m lost to illegal crypto transactions in Pakistan is not just about numbers; it is about the collision between rapid technological change and a fragile economic system. A combination of dollar shortages, high crypto adoption, weak regulation, and aggressive marketing created the perfect environment for unregulated digital currency flows.

Authorities are now trying to catch up, cracking down on illegal trading, drafting new laws, and forming specialized bodies such as PVARA.

For Pakistan to truly benefit from blockchain and digital assets, it must move from shadowy, illegal crypto transactions to transparent, regulated virtual asset markets.

FAQs

Q: Is cryptocurrency legal in Pakistan right now?
The State Bank of Pakistan and the federal government.

Q: What exactly are “illegal crypto transactions in Pakistan”?
“Illegal crypto transactions” generally refer to any buying, selling, transferring, or trading of digital assets that violates current Pakistani regulations. This includes funding foreign exchanges via local bank accounts, using P2P markets to buy stablecoins, or running unlicensed training centers and investment schemes.

Q: How did Pakistan reportedly lose $600m through crypto?
Reports suggest that around $600m has left Pakistan via unregulated digital currency channels in a single year. This typically involves people sending money abroad, converting it into crypto on foreign platforms, and then moving or holding those assets outside the reach of Pakistan’s formal banking and regulatory systems. Because these flows bypass documentation and oversight, they represent both capital flight and a significant loss of foreign exchange.

Q: What is the Pakistan Virtual Assets Regulatory Authority (PVARA)?
Its goal is to create a secure and transparent framework for virtual assets, reduce illegal activity, and eventually integrate crypto into the formal economy.

Q: Is it safe for me to invest in crypto from Pakistan using foreign exchanges?
From a legal standpoint, investing in crypto from Pakistan via foreign exchanges is risky, because it likely conflicts with existing bans and could attract regulatory scrutiny. From a financial perspective, you also face the danger of scams, hacks, and platform failures without strong legal protection. Until Pakistan fully implements a regulated framework for digital assets, the safest approach for most individuals is to avoid illegal crypto transactions and follow official guidance from SBP and other regulators.

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