SBI Research's veiled attack on Pakistan over cryptocurrency deal with US-based crypto firm

New Delhi: Amidst the ongoing India-Pakistan tension, a latest report by SBI Research took a veiled attack on the latest crypto initiative of Pakistan. The report says the rogue neighbour with a broken economy took a leap of faith in an opposite direction by deciding to launch a digital currency program with the US-based crypto firm.

During May, just days after the Pahalgam terror attack, Pakistan came to an agreement with World Liberty Financial (WLF), a US-based cryptocurrency firm, which reportedly holds 60 percent controlling ownership of US President Donald Trump’s family. The pact marks the first such agreement signed in digital currency assets by a South Asian rogue neighbour.

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The report commented that "the mess this neighbor of ours has put itself into on all counts makes the evolving situation simultaneously gravely ridiculous and comically pathetic." Pakistan is currently facing skyrocketing inflationary pressure on its currency and is surviving its economy on the recurrent IMF bailouts.

The Pakistan Crypto Council (PCC) is heading the pilot program in partnership with the US firm. The goal is to enhance and link blockchain technology with Pakistan's traditional financial system, such as in banks, trade settlement, foreign exchange, and gold, and to link it with the financial technical domain.

The report further says that the "economic integration intended through the National Crypto Council, whose CEO was appointed this May as the PM’s special assistant on blockchain and cryptocurrency with Minister of State status—this troubled neighbor looks set to venture into an area where the angel would fear to trade."

"Worse, its policymakers and Central Bank could have read the writing on the wall, which is evident through blocking the CBDC developments in the US," said the report further.

Chainalysis, an American blockchain analysis firm, says that in 2024, Pakistan emerged ninth on the scale of cryptocurrency adoption, recording 25 million regular users in yearly transactions. Experts are of the opinion that developing a crypto ecosystem in Pakistan poses challenges to the internal and external security of India, as it is not recognized as legal tender in India and it is highly taxed at 30 percent.