KARACHI: Pakistan has lost an estimated $600 million to illegal cryptocurrency transactions, sharply reducing the flow of dollars into the country’s banking system, industry officials said on Friday. The money, mostly routed through foreign currency accounts and then invested in cryptocurrencies, has gone untraced, raising concerns among regulators.
Malik Bostan, Chairman of the Exchange Companies Association of Pakistan, said that while banks received $4 billion in dollar sales during the first 10 months of last year, the figure fell to $3 billion in the same period this year. “These disappeared dollars were mostly invested in cryptocurrencies,” he explained.
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The State Bank of Pakistan (SBP) recently instructed banks and exchange companies to transfer dollars directly into customers’ FCY accounts instead of providing cash. However, many individuals withdraw these dollars and invest them in crypto through illegal channels, further straining the foreign exchange market.
Dollar sales to banks also dropped during the first four months of the current fiscal year, with exchange companies selling $873 million compared to $1.139 billion during July–October 2024 — a decline of 23 percent. Meanwhile, commercial banks’ dollar holdings rose slightly from $4.180 billion in January 2025 to $4.625 billion, showing a partial offset to the losses.
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The government is preparing to enter the international financial market with new bonds and Panda Bonds in China to strengthen reserves. Currently, the SBP’s foreign exchange reserves stand at $14.551 billion, with expectations to reach $17 billion by the end of FY26. Experts note that increasing remittances and an anticipated IMF disbursement of $1.2 billion could further stabilize the currency situation, though illegal crypto trading remains a concern.