Chasing quick riches: The risky crypto dream of Pakistan's youth
Business
SBP has clarified that virtual currencies are not legal tender
ISLAMABAD (APP) - Pakistan’s youth are flocking to digital currencies, hoping to strike it rich quickly. However, the extreme volatility, lack of regulations, and limited education make this venture highly risky, often leading to heavy financial losses and exposure to scams.
Experts have warned that while digital currencies offer potential rewards, young investors must exercise caution. Proper education on market dynamics, security protocols, and regulations is essential to avoid falling victim to fraud and crashes.
Although some Pakistani investors have seen profits from Bitcoin and Ethereum, the high-risk, high-reward nature of cryptocurrencies demands thorough research before diving in.
Hamza Anwaar, Manager of Public Relations at Zahid Latif Khan Securities (Pvt) Ltd, told APPC that cryptocurrency trading is akin to stock trading but without any physical assets backing it.
He described it as “fake” and highlighted the risks, noting, “Several people came into our office seeking advice on recovering funds from their banned accounts.”
Despite the rising popularity of cryptocurrencies, policymakers and financial institutions in Pakistan remain opposed to digital currency trading. The State Bank of Pakistan (SBP) has clarified that virtual currencies are not legal tender and has advised banks and financial institutions not to facilitate cryptocurrency transactions.
Globally, digital currencies have gained significant recognition. Over the past few years, several countries have adopted or are considering regulations to integrate cryptocurrencies into their financial systems. The U.S., Japan, Germany, and Switzerland are leading the charge, with cryptocurrencies being fully legalized in these nations.
The European Union is also progressing toward a unified regulatory framework, while nations like El Salvador have even declared Bitcoin as legal tender.
This global acceptance underscores the transformative potential of digital currencies in reshaping finance, business, and global trade.
In terms of global investment, the cryptocurrency market has surged to an estimated value of over $2 trillion as of 2024. The rapid growth is driven by institutional investors, large tech companies, and retail traders, with Bitcoin and Ethereum remaining the dominant players.
However, market volatility continues to be a challenge, as cryptocurrencies can swing drastically in value, making long-term stability uncertain.
To benefit from the growing global crypto ecosystem, Pakistan needs a clear regulatory framework that encourages innovation while protecting investors.
Developing guidelines for cryptocurrency trading and enhancing investor education on risks will help guard against scams and fraud. Additionally, creating secure platforms for trading digital currencies will boost investor confidence and reduce vulnerability to market crashes.
Pakistan should also focus on increasing access to digital currency knowledge, providing training programs, and fostering partnerships with global financial institutions and tech companies.
This will allow the country to tap into cryptocurrencies not just as an investment, but as a tool for entrepreneurship and financial inclusion. If regulated properly, digital currencies could play a vital role in Pakistan’s financial future, offering new opportunities for youth to engage in the global economy while managing market risks.
However, the country’s regulatory bodies need to act quickly to balance innovation with investor protection. With the right approach to regulation, education, and infrastructure, Pakistan has the potential to be a key player in the crypto landscape.
Young traders like Ashraf, who started investing in Bitcoin when it was worth just $700, are turning to digital currencies to escape traditional financial systems. Sharing his success story, with APP of buying a new expensive car and a home from investing in crypto, he highlights the lucrative rewards of cryptocurrency investment. However, the risks remain certain, and many young Pakistanis view digital currencies as a chance to participate in the global economy.
A report by the Federation of Pakistan Chamber of Commerce and Industry in 2020-21 estimated that Pakistan holds around $20 billion in cryptocurrencies—a staggering 700% increase. As Pakistan’s tech-savvy youth continue exploring crypto, a balanced approach that combines enthusiasm with caution will be essential for long-term success in the ever-evolving financial landscape.
