Pakistan Strikes Crypto Deal with El Salvador as It Eyes Bitcoin Reserve

Pakistan has established the Pakistan Virtual Assets Regulatory Authority (PVARA), an independent federal regulator empowered to license, monitor, and supervise virtual asset service providers. Approved by the federal cabinet and enacted through a presidential ordinance on July 8, 2025, PVARA operates under the Virtual Assets Ordinance to ensure compliance with Financial Action Task Force guidelines and global standards, covering anti‑money‑laundering, cybersecurity, and investor protection. This move marks a significant reversal from past restrictions and seeks to bring transparency and legal robustness to Pakistan’s estimated $300 billion informal crypto market and more than 40 million users.

In concert with the launch of PVARA, Pakistan has unveiled plans for a government-backed strategic Bitcoin reserve alongside allocating 2,000 MW of surplus electricity to power Bitcoin mining operations and artificial intelligence data centers. These announcements, made at the Bitcoin 2025 conference in Las Vegas and reiterated by leaders including Bilal Bin Saqib, CEO of the Pakistan Crypto Council (PCC) and Special Assistant to the Prime Minister for Blockchain and Crypto, signal Pakistan’s ambition to position itself as a major digital-asset hub in South Asia. Bilal Bin Saqib, who was appointed to his ministerial-level role on May 26, 2025, has emphasized the goal of aligning innovation with Sharia principles by recruiting advisors such as Binance founder CZ and Strategy’s Michael Saylor.

Bilal Bin Saqib shared highlights of the meeting with President Bukele on social media, emphasizing the strategic importance of the partnership.

El Salvador’s experience has been closely monitored by the International Monetary Fund, which required in its March 2025 loan conditions that the country phase out public support for the Chivo digital wallet and stop using taxpayer funds to buy Bitcoin by July 2025. Despite these requirements, government purchases have persisted, reflecting a tension between crypto ambitions and IMF-imposed disciplines. Pakistan, meanwhile, is under its own IMF-supported $7 billion economic program running through 2027. The IMF has voiced discomfort about state-level Bitcoin accumulation and subsidized mining, cautioning that such initiatives could risk foreign-exchange stability and market distortions.

Despite external oversight, Pakistan appears intent on accelerating crypto adoption within a regulated framework. PVARA’s authority extends to licensing virtual asset service providers, regulating markets, supervising compliance, operating a regulatory sandbox, issuing no-action letters, and establishing a Sharia advisory committee alongside an appellate tribunal, ensuring that digital asset products align with both international standards and Islamic finance principles. The PCC, created in March 2025 under Finance Minister Muhammad Aurangzeb with Saqib at the helm, has guided this shift by connecting with both global crypto leaders and domestic institutions.

The Pakistan–El Salvador crypto partnership is the first bilateral agreement of its kind between an IMF-program country in South Asia and the world’s first Bitcoin nation. It lays the groundwork for policy exchanges, technical cooperation in mining and blockchain infrastructure, and coordinated approaches to public-sector integration of digital assets. Pakistan hopes that tapping into El Salvador’s practical lessons, such as regulatory sandbox design, VAT-free frameworks, and renewables-powered mining can inform its own strategy.

The deal also represents geopolitical signaling, as both nations assert economic innovation that challenges traditional financial orthodoxy. El Salvador has already forged over 25 international crypto partnerships, and Pakistan’s entry develops South Asian engagement in this global network. For emerging economies aiming to reduce reliance on foreign-exchange reserves and boost financial inclusion, sovereign digital asset participation may offer a model, provided macroeconomic and regulatory risks are carefully managed.