By Staff Reporter
ISLAMABAD: Pakistan’s finance ministry is considering tokenizing as much as $2 billion of its domestic government debt in an initial push, according to a senior official, as the cash-strapped nation looks to harness blockchain technology to widen access to its bond market and cut costs.
The move would convert traditional bonds into digital tokens on a blockchain ledger, enabling easier electronic trading and custody. Advocates argue that such digitisation can slash transaction fees, boost transparency and open the door to smaller retail buyers who are often sidelined in markets controlled by big banks and institutions.
Details emerged at ITCN Asia, the country’s premier tech expo that draws global policymakers, investors and startups. The gathering has become a go-to venue for Islamabad to float ideas on digital finance, AI and other innovations, even if many are still in the conceptual phase. “Ministry of Finance, Government of Pakistan, has also planned to tokenize some portion of its domestic debt worth $2 billion in first phase, primarily tapping retail investors,” adviser to the finance minister Khurram Schehzad said at the forum, according to a ministry statement released on Sunday.
Schehzad offered no specifics on timing, regulatory setup or how the plan would mesh with Pakistan’s current debt management system. Oversight by bodies like the central bank or recently established the Pakistan Virtual Assets Regulatory Authority (PVARA) also remains undefined. The proposal comes amid a broader effort by Pakistan to engage with digital assets. In recent months, officials have ramped up talks on crafting rules for cryptocurrencies, blockchain uses and tokenized securities. They’re eyeing models from places like the United Arab Emirates, though Pakistan acknowledges it’s still early days in mapping out its approach.
The PVARV has been created under the Virtual Assets Ordinance 2025, to license, regulate, and supervise virtual assets and service providers like crypto exchanges, bringing transparency and compliance to the digital asset space, with the goal of integrating blockchain technology into the national economy. This authority, supported by the Pakistan Cryptocurrency Council (PCC) and led by Bilal Bin Saqib, aims to formalise the sector, attract investment, and align with international standards like FATF guidelines.
Pakistan’s public debt stands at about $290 billion, with domestic borrowings making up the bulk. The government has leaned heavily on local banks to finance deficits, but high interest rates and inflation have strained budgets. Tokenization could potentially diversify funding sources by drawing in individual savers, who might find fractional ownership of bonds more appealing through apps or digital wallets. Still, challenges loom. Blockchain adoption in emerging markets often hits snags over regulatory gaps, cybersecurity risks and investor education.
Pakistan’s economy, reeling from floods, political instability and IMF bailout conditions, may face added scrutiny from global lenders on such experiments. Officials have signaled openness to innovation as a way to modernise finance and attract foreign capital. Yet, without concrete steps, the tokenization idea risks joining a list of exploratory tech initiatives that have yet to gain traction.
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