New Delhi, Oct 5 : Pakistan's ambitious push into Bitcoin and digital finance is raising concerns among experts, as the country grapples with weak regulations, energy challenges, and a history of crypto-related fraud.

While the government aims to use Bitcoin as a national savings mechanism and attract foreign investment, analysts warn that the plan may be premature and fraught with risks.

In March 2025, the government established the Pakistan Crypto Council (PCC), led by Bilal Bin Saqib, the State Minister for Crypto & Blockchain, as per Financial Post report.

Later, in May 2025, Pakistan announced the creation of its first government-led Strategic Bitcoin Reserve during the Bitcoin 2025 conference in Las Vegas.

Alongside the PCC, the Pakistan Digital Assets Authority (PDAA) was formed to draft regulations for cryptocurrencies, digital wallets, and blockchain systems.

These institutions aim to formalise and harness the power of digital assets, with plans to use Bitcoin as a national savings mechanism.

The announcement of a strategic Bitcoin reserve has caught global markets off guard, the report said.

However, questions arise about whether the government has acted prematurely, unveiling its plans before laying the necessary groundwork.

The success of this strategy depends on Pakistan's ability to establish a clear and enforceable regulatory framework that can protect investors and ensure transparency.

Pakistan's energy sector faces challenges, including long-term contracts and declining demand, forcing the government to pay over $7 billion annually for unused electricity.

In response, the government plans to redirect this surplus power to Bitcoin mining and AI data centres, aiming to monetise idle energy, attract foreign investment, and create tech-driven employment.

Global interest has followed, with international Bitcoin miners and data infrastructure firms reportedly exploring partnerships with the PCC.

In June 2025, Pakistan signed agreements with Trump-backed crypto venture World Liberty Financial (WLF) and Binance to expand blockchain infrastructure and promote decentralized finance (DeFi).

However, the plan faces complications. Bitcoin mining is energy-intensive, and Pakistan's grid, largely powered by fossil fuels, raises environmental concerns.

The International Monetary Fund (IMF) has already rejected aspects of the crypto power subsidy plan, signalling potential financial and diplomatic friction.

Moreover, logistical challenges within Pakistan's electricity infrastructure, including frequent blackouts and inconsistent supply, could hinder the success of the Bitcoin reserve.

Pakistan's economic woes, rising inflation, mounting debt, and declining industrial activity make the crypto pivot seem like a desperate attempt to leapfrog into prosperity.

But the foundation is shaky. The State Bank of Pakistan has historically discouraged crypto trading, and the legal framework remains underdeveloped.

Without clear legal protections, investors face the threat of account freezes, bans, and limited recourse in the event of fraud.

The volatility of cryptocurrencies further compounds the danger, with sudden price swings capable of wiping out investments overnight.

Security concerns loom large, especially given Binance's global scrutiny over anti-money laundering violations and WLF's political entanglements, which raise questions about governance and transparency.

Pakistan's crypto landscape is also haunted by a history of fraud. In January 2022, one of the country's largest cryptocurrency scams left investors with losses totalling $100 million.

Fraudulent mobile applications lured individuals into investment schemes, urging them to transfer funds from Binance wallets to deceptive platforms. When the apps collapsed, thousands were locked out of their investments.

The problem has only worsened. In 2024 alone, over 11,000 bank accounts were frozen due to crypto-related fraud, with 90 per cent of victims unaware they were part of illicit transaction chains.

Recovery is slow and arduous, with only 15 per cent of accounts restored, and traders who declare crypto transactions often face permanent bans.

Environmental sustainability adds another layer of complexity. Bitcoin mining is notoriously energy-intensive, and Pakistan's reliance on fossil-fueled power grids raises serious climate concerns.

The IMF has reportedly rejected aspects of Pakistan's crypto power subsidy plan, signalling potential financial complications and international resistance, the report stated.

/IANS