Regulating Crypto
The last two decades have witnessed a revolution in technological development. Web technologies have evolved from static Web 1.0 pages to dynamic Web 2.0 and now to the decentralized promise of Web 3.0. More importantly, we have seen a fundamental shift in how economies, governance, and even the idea of trust operates. Corporations now aim not only to dominate national markets, but they aspire to achieve a universal presence. This new world order is bringing about a power shift—from states to corporations.
While global institutions are designing the future, countries like Pakistan grapple with the idea of whether this future is real. Blockchain, cryptocurrency, and artificial intelligence aren’t concepts confined to the realm of sci-fi; rather, they are forming the backbone of tomorrow’s economy. The trillion-dollar question now is: can Pakistan keep up while ensuring the protection of its citizens?
Pakistan has indeed made some commendable progress. The formation of the Pakistan Virtual Assets Regulatory Authority under a recent ordinance is a step in the right direction. Aligning with Financial Action Task Force and anti-money laundering frameworks, and recognizing the need to monitor digital assets rather than simply banning them, reflects a maturing perspective.
However, these initiatives may risk becoming mere token gestures if the dominant mindset continues to treat crypto primarily as a taxable asset to address fiscal gaps. Revenue-oriented policymaking will fall short of providing the long-term stability and trust that this market needs.
Regulatory frameworks must transcend beyond taxation and address market integrity, transparency, and consumer protection. Rampant misinformation and deceptive marketing practices pose significant challenges in the cryptocurrency space. Consumer exploitation by platforms is common, with speculative investments promoted using sophisticated reports that blur the line between objective analysis and covert advertising.
Moreover, the regulatory framework currently lacks clarity regarding the listing of new cryptocurrencies on exchanges. Unlike traditional financial markets, where securities undergo rigorous vetting, the crypto market leaves vetting and listing decisions to private exchanges. Without national standards or uniform criteria to ensure investor protection or market integrity, serious concerns arise. Who ensures investor security when a token can be listed with minimal accountability? This highlights the pressing need for formal regulatory scrutiny.
In a market where the commercial priorities of exchanges often supersede due diligence and transparent risk disclosure, the absence of clear regulatory oversight leaves investors vulnerable to fraud and manipulation. Pakistan must heed the obvious pitfalls of failing to properly regulate the crypto space and must create comprehensive guidelines for investor safety.
Beyond policy and legal measures, the real challenge lies in societal readiness. The average citizen lacks the digital literacy required to navigate a decentralized financial world. In a country where people fall for scams promising free cash prizes or send money to strangers on the promise of unsecured loans, the idea of responsible participation in a borderless, trustless financial system seems far-fetched.
Regulating crypto is not just about controlling commercial entities—it’s about safeguarding ordinary citizens from fraud, misinformation, and technical exploitation. Consumer protection must be embedded into the laws from the very outset.
There’s also the question of capacity. Effective oversight requires deep technical understanding, not just will. Blockchain, smart contracts, or decentralized finance cannot be regulated with the same bureaucratic logic used for conventional banking. Pakistan’s regulators currently lack the technical knowledge required to oversee such rapid technological changes. Even well-intentioned regulations will fail if the implementation mechanisms cannot keep pace with rapid technological change.
Furthermore, dispute resolution remains a major bottleneck. Courts are overburdened and under-resourced. Legal officers do not understand the complexity of blockchain-based systems or smart contract failures. In such an environment, ensuring justice for consumers becomes uncertain.
If digital asset cases continue to be funneled through an outdated legal infrastructure, delays and misjudgments are not just possible—they are guaranteed. Pakistan needs special tribunals composed of blockchain experts, finance professionals, and cybersecurity analysts to ensure timely, competent, and fair handling of digital asset-related cases.
The shift from Web 2.0 to Web 3.0 is not just a change in technology; it’s a power shift—from the state to the user, from centralized banks to decentralized financial institutions, from governments to corporations. Pakistan must stop playing catch-up with the past. It needs to design smarter regulations, establish consumer safeguards, and invest in institutional capacity. Moving from reactive policymaking to leadership is imperative. Without this, the next disruption doesn’t just threaten to leave Pakistan behind; it threatens to render it irrelevant.
