BALANCING INNOVATION AND RISK: THE CASE FOR CRYPTOCURRENCY REGULATION IN PAKISTAN

Abstract

Cryptocurrencies have become quite popular in Pakistan, though their legal and regulatory status is not clear yet. This research investigates the issues facing Pakistan in regulating cryptocurrencies: financial risks, legal risks, consumer protection, and compliance with international economic regulation. The study attempts to provide options for a comprehensive regulatory clause concerning the position of the State Bank of Pakistan, the prevailing legal voids, and the established practices of the world. Moreover, it marks the risks of money laundering, fraudulent activities, and the absence of a systematic payment collection system. By reviewing comparative models of regulatory control, the study aims to incorporate the need for the protection of finances without hindering technological progress. The results indicate that a country like Pakistan needs to delineate a legal coverage framework in order to achieve economic control while adopting such technologies as blockchain. While these findings add to the existing debate regarding the regulation of finances in the digital age, they also suggest the need for a balanced approach that nurtures innovation but reduces financial vulnerability.