The Federal Board of Revenue (FBR) has initiated formal consultations with industry experts to draft legislation that would introduce cryptocurrency regulation and establish a taxation framework for digital assets in Pakistan. The move comes following the directives of the Federal Tax Ombudsman (FTO), which urged the tax authority to address the growing use of cryptocurrencies in the country and their implications for revenue generation.
According to the FTO’s directive, a formal complaint had been filed requesting the FBR to clarify its tax policy on cryptocurrencies, as Pakistan continues to see a surge in digital currency activity. Globally, there are over 560 million cryptocurrency users, with an estimated nine million in Pakistan, making it the sixth-largest country in the world for crypto adoption.
The FTO emphasized that Pakistan’s cryptocurrency market has witnessed rapid growth, driven by both individual investors and institutional participants, while remaining largely outside the formal regulatory and taxation framework. The report noted that significant commercial transactions are being carried out using crypto assets, which currently fall outside the ambit of the tax regime, highlighting what it called a “serious lapse” in oversight.
In response, the FBR’s Policy Wing confirmed that the issue is technical and under active consideration in collaboration with subject-matter experts. The consultations are expected to address legal, fiscal, and regulatory dimensions, including the taxation of income, profits, and assets generated through digital currency transactions.
The FTO underscored that unless legal provisions and clear regulations are introduced, money and profits generated through cryptocurrency will remain undocumented and untaxed. It also pointed out that, if properly streamlined, the emerging crypto sector could help ease the government’s revenue constraints and broaden Pakistan’s tax base.
Referencing international best practices, the FTO highlighted that under the Financial Crimes Enforcement Network (FinCEN) in the United States, crypto miners are classified as money transmitters, making them subject to existing financial regulations. The directive suggested that Pakistan could draw lessons from such frameworks to ensure compliance, anti-money laundering measures, and transparency.
The State Bank of Pakistan (SBP) has also reportedly agreed in principle to the legalization of digital currencies, signaling growing institutional acceptance of crypto within Pakistan’s financial system. However, the SBP had earlier issued a circular in April 2018 cautioning against the risks associated with virtual currencies but stopped short of declaring them illegal.
The FTO’s office further recommended that the FBR include key stakeholders, such as financial institutions, crypto industry representatives, and investors, in the consultation process and ensure that the proposed regulatory measures are incorporated into the upcoming Finance Bill.
By formalizing cryptocurrency regulation, Pakistan aims to balance innovation with oversight, bringing digital assets into the mainstream economy while ensuring transparency and revenue compliance. The FBR’s ongoing consultation marks a pivotal step toward a structured crypto policy, which could reshape the country’s stance on digital finance and emerging technologies.
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