Bitcoin News Update: Pakistan's Foreign Exchange Outflow Accelerates Amid Economic Instability and Lax Crypto Oversight
- Pakistan reports $600M forex loss via illicit crypto transactions, draining 23% of dollar inflows through unregulated channels. - ECAP reveals cash withdrawals from licensed firms fund crypto investments, straining reserves amid trade deficits and political instability. - SBP tightens forex controls but experts warn crypto outflows persist, mirroring global crypto losses and compounding weak enforcement. - Geopolitical shifts, including Trump's India-Pakistan ceasefire claims and U.S.-Pakistan military c
Pakistan's financial regulators are raising concerns about a significant outflow of foreign currency into unregulated cryptocurrency markets, with almost $600 million leaving the country this year through unauthorized means. This movement, fueled by individuals transferring dollars from licensed exchange companies to crypto platforms, has worsened foreign exchange losses and exposed regulatory weaknesses in a country already facing economic instability.
The Exchange Companies Association of Pakistan (ECAP) disclosed that people are buying U.S. dollars from approved exchange firms, moving them into foreign currency accounts, and then withdrawing cash to invest in cryptocurrencies via unofficial routes. This process has reduced the flow of dollars into the formal banking sector by 23%, with $600 million diverted from official channels between January and October. "
The State Bank of Pakistan (SBP) has issued tougher regulations, instructing banks and exchange companies to credit foreign currency transactions directly to customer accounts instead of providing cash. Nonetheless, analysts caution that this step may not completely stop the outflow,
The currency drain is happening alongside a worldwide downturn in crypto, where the industry has
International developments add further complexity.
As Pakistan looks to re-enter global capital markets, such as by issuing Panda Bonds in China, authorities must tread carefully. While the SBP targets raising reserves to $17 billion by fiscal year 2026, the ongoing crypto outflow highlights the fragility of a financial system still recovering from a 2023 default narrowly avoided with IMF assistance.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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