KARACHI: Pakistan has lost an estimated $600 million to illegal cryptocurrency transactions this year, a development that has significantly reduced dollar inflows into the banking system and raised fresh concerns for policymakers already struggling to stabilise the external sector.
According to Exchange Companies Association of Pakistan (ECAP) Chairman Malik Bostan, the disappearance of nearly $600m is directly tied to individuals purchasing dollars from exchange companies, depositing them into their foreign currency (FCY) accounts, and later withdrawing the funds to invest in cryptocurrencies through unlawful channels.
“Last year, during the first 10 months, we sold banks about $4 billion, which fell to $3 billion during the same period this year. These disappeared dollars were mostly invested in cryptocurrencies,” Bostan said.
During January–October, Pakistanis retained around $400m in their FCY accounts, while an additional $600m left the system without trace, ECAP estimates show.
The State Bank of Pakistan (SBP) recently issued directives banning the provision of cash dollars for FCY deposits. Instead, banks and exchange companies must now transfer funds directly into FCY accounts or issue cheques. However, Bostan said these dollars are later withdrawn and diverted into crypto markets, bypassing the formal banking system.
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Dollar sales to banks have fallen sharply. Exchange companies sold $1.139bn to banks during July–October 2024, compared to $873m in the same period of 2025 — a 23pc decline. Monthly sales in July, August, September and October were also significantly lower compared to last year.
State Bank data shows commercial banks’ dollar holdings rose from $4.180bn in January 2025 to $4.625bn, partly reflecting higher remittances and tight regulatory controls.
The country has lost an estimated $600 million to illegal crypto transactions.
This has sharply reduced the flow of dollars into the banking system as people buy dollars from exchange companies and route them into cryptocurrencies.https://t.co/5b0zBWZSku
— Dawn Business (@dawn_business) November 22, 2025
Pakistan has long grappled with foreign exchange shortages and narrowly avoided default in 2023. After securing an IMF bailout, restrictions on imports, crackdowns on smuggling and limits on illegal trading helped stabilise the currency. But the growing outflow of dollars through cryptocurrency channels poses a new challenge that could undermine efforts to curb the current account deficit and reduce reliance on foreign borrowing.
Meanwhile, the government is preparing to tap international capital markets with new global bonds and enter China’s financial market with Panda Bonds. SBP reserves currently stand at $14.551bn, with expectations of rising to $17bn by the end of FY26, supported by robust remittance inflows.
Currency experts believe the IMF is likely to release a further $1.2bn, which would bolster reserves and ease external financing pressures.
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