Dubai's $35bn crypto boom: How Islamabad can catch up

Pakistan could enable companies to innovate and test solutions under flexible conditions, through regulatory sandbox for crypto businesses
A representational image. — Canva
A representational image. — Canva 

Dubai has become a major hub for cryptocurrency, with $35 billion in transactions reported in just one year. According to Chainalysis, 67% of these investments came from institutional players, each transaction exceeding $1 million.

A short three-hour, 35-minute flight separates Dubai’s growing crypto market from Islamabad, which struggles to attract foreign capital. In April 2024, Pakistan received only $358 million in foreign direct investment (FDI), a stark contrast to Dubai’s crypto boom.

Establishing crypto exchange in Pakistan

Industry experts highlighted the importance of Pakistan creating a government-regulated cryptocurrency exchange. This exchange would offer a secure trading platform, comply with anti-money laundering (AML) and know-your-customer (KYC) standards, and build investor confidence.

Tax-free crypto trading

To attract investment, tax incentives such as eliminating capital gains taxes on cryptocurrency trading have been suggested. By providing a regulatory sandbox for crypto businesses, Pakistan could enable companies to innovate and test solutions under flexible conditions, similar to successful models in markets like Dubai.

However, challenges like limited access to banking services and inadequate internet infrastructure continue to slow down Pakistan's crypto aims. Addressing these issues could lead to significant growth in the sector.

Pakistan's regulatory landscape creates uncertainty, deterring both domestic and foreign investors. Cryptocurrency businesses face restricted access to banking services and hold back their operations. Limited access to high-speed internet further increases these challenges.