Pakistan moves to test dollar-pegged digital currency

ISLAMABAD:

Pakistan on Wednesday signed a pact with a company linked to the family of US President Donald Trump to explore integrating a dollar-pegged stablecoin into its national payment system to enable faster and cheaper cross-border transactions.

The Finance Ministry and SC Financial Technologies LLC — an affiliated entity of World Liberty Financial — signed a memorandum of understanding (MoU) to assess the potential use of World Liberty's USD1 stablecoin for cross-border payments, according to a ministry announcement.

The one-year, non-binding MoU aims to explore avenues for transactions in US dollar-pegged stablecoins. The government expects to introduce a comprehensive legal framework within a year, prior to declaring digital currencies legal tender in Pakistan.

Stablecoins are regulated in Pakistan under the Virtual Assets Ordinance and are referred as "Asset Referenced Tokes". The ordinance is going to lapse in next two months and the government would soon begin the process to convert the ordinance into a law.

Finance Minister Muhammad Aurangzeb and CEO World Liberty Financial Zachary Witkoff, son of US special envoy Steve Witkoff, signed the MoU at a ceremony witnessed by Prime Minister Shehbaz Sharif and Chief of Defence Forces (CDF) Field Marshal Syed Asim Munir.

Pakistan is emerging as one of the most compelling frontier markets for digital payments and financial innovation, driven by over $38 billion in annual remittance inflows, a rapidly growing digital economy, the Finance Ministry stated.

An estimated 40 million crypto users and industry estimated annual trading volume of up to $300 billion place the country among those having the largest digital asset user bases globally, the ministry added.

The announcement represents one of the first publicly announced tie-ups between the World Liberty, a crypto-based finance platform launched in September 2024, and a sovereign state. It also comes amid a warming of ties between Pakistan and the United States.

Stablecoin is a type of cryptocurrency designed to maintain a stable value by pegging its market value to an external, less volatile asset, most commonly a traditional fiat currency like the US dollar.

The Finance Ministry said that the deal will enable structured dialogue and technical understanding around emerging digital payment architectures, including the exploring of the World Liberty Financial's stablecoin, USD1 for cross-border transactions.

The delegation was led by Zachary Witkoff, Chief Executive Officer of the SC Financial Technologies LLC, who also met with senior Pakistani stakeholders to discuss how countries are approaching secure, compliant, and transparent digital payment infrastructure, including innovations in cross-border settlement and foreign exchange processes.

The use of digital currencies as tender is still illegal in Pakistan and the central bank, and the federal government entities are in the process of finalising the new legal framework.

In September last year, the central bank said that restrictions under the Foreign Exchange Regulation Act (FERA), including the maximum annual limit of $100,000, will apply to foreign transfers of digital currencies. The SBP also said it is working on launching a new digital currency.

The Finance Ministry said that Pakistan is rapidly positioning itself as a serious contender in the global digital finance landscape, as the World Liberty Financial deepens its engagement with the country to explore next-generation digital payment and cross-border finance innovations.

Industry observers view the World Liberty Financial's second engagement with Pakistan as a strong indication that the country is being actively evaluated as a potential early-stage partner jurisdiction for exploring new digital payment models including its stablecoin, USD1, at a time when stable, regulation-aware markets are increasingly sought by global fin-tech players.

Speaking on the occasion, Senator Muhammad Aurangzeb, Federal Minister for Finance and Revenue, said that "Pakistan recognises that the future of finance is being shaped today. Our focus is to stay ahead of the curve by engaging with credible global players, understanding new financial models, and ensuring that innovation, where explored, is aligned with regulation, stability, and national interest."

This momentum builds on earlier engagement between the World Liberty Financial and Pakistan, including the signing of a Letter of Intent (LoI) in April with the Pakistan Crypto Council, led by CEO Bilal Bin Saqib, which laid the groundwork for knowledge-sharing and ecosystem-level dialogue around emerging financial technologies.

It also follows recent regulatory developments in Pakistan's digital asset sector. On December 12, the newly-established Pakistan Virtual Asset Regulatory Authority issued no-objection certificates (NOCs) to Binance and HTX, enabling both platforms to initiate local incorporation in Pakistan.

These NOCs were issued in under five months, faster than comparable timelines seen in other jurisdictions globally. As part of the engagement, the Founder of Binance, Changpeng Zhao and Founder of TRON, Justin Sun also visited Pakistan, meeting with key public and private sector stakeholders as part of broader engagement around the country's evolving digital asset and regulatory framework.

With sustained international interest and a structured, regulation-first approach, Pakistan is increasingly being viewed as a market to watch in the evolution of global digital finance.

Meanwhile, the delegation of the World Liberty Financial, led by Zachary Witkoff, called on Field Marshal Syed Asim Munir, the Inter-Services Public Relations (ISPR) said. It added that the meeting reflected the growing interest of international private investment groups in Pakistan's evolving economic landscape.

During the meeting, Witkoff highlighted the immense economic potential Pakistan holds and lauded the efforts of Pakistan's leadership in embracing futuristic technologies to realise the full possibilities of its economic prowess.

Field Marshal Asim welcomed the exchange of views and emphasised Pakistan's commitment to economic stability, investor confidence, and enabling an environment conducive to responsible private sector participation in national development.