The rupee-backed stablecoin is emerging as a major strategic move by State Bank of Pakistan (SBP) and Pakistani financial regulators. As Pakistan explores issuing a stablecoin pegged to its national currency, this article delves into what it means, why it matters, and how it fits into broader digital finance and regulation.
What is the “rupee-backed stablecoin”?
- Pakistan is considering launching a stablecoin backed by the Pakistani rupee.
- Backed means the token would be pegged to the value of the rupee (or supported by rupee-equivalent reserves), aimed at limiting volatility typical of crypto assets.
- This comes alongside moves to develop a central bank digital currency (CBDC) by the SBP, with support from the International Monetary Fund (IMF) and World Bank.
Why Pakistan Is Moving Now
Economic opportunity
Experts estimate Pakistan could unlock USD 20-25 billion in crypto- and digital-asset-related economic growth if regulation and innovation proceed.
Financial inclusion & remittances
- Pakistan has a substantial unbanked or under-banked population; a digital currency could extend financial services reach.
- Remittances are a major factor: easier, cheaper cross-border payments are key.
Modernising payments infrastructure
By introducing a rupee-backed stablecoin (and a CBDC), Pakistan aims to upgrade its payment systems and align with global digital finance trends.
Regulatory & Development Context
- The SBP is already developing a CBDC prototype.
- Pakistan has established the Pakistan Virtual Assets Regulatory Authority (PVARA) under the Virtual Assets Ordinance in 2025 to oversee virtual assets regulation.
- At a conference, the Pakistan Banks Association (PBA) reinforced the need to act swiftly so as to not miss the “25 billion-dollar opportunity”.
Key Features & Considerations
- Pegging & backing: The stablecoin would be pegged to the rupee; reserves or other backing mechanisms would be needed to maintain stability.
- Integration with CBDC: The rupee-stablecoin may work alongside or tie into the later full rollout of the CBDC.
- Regulation: Clear rules for virtual assets, AML/KYC frameworks, and oversight via PVARA are critical.
- Phased rollout: Officials emphasise a pilot phase for the CBDC before full implementation.
Potential Benefits
- Reduced transaction costs: Especially for remittances and cross-border flows.
- Financial inclusion: Bringing digital finance to under-banked populations.
- Enhanced payment efficiency: Less reliance on cash, faster settlement, easier access.
- Capturing market share: By acting early, Pakistan hopes to secure a stake in the global digital-asset economy.
Risks & Challenges
- Currency stability concerns: A rupee-pegged stablecoin in a volatile currency environment poses risk of de-pegging or currency risk.
- Regulatory and compliance burdens: Ensuring AML/KYC, avoiding illicit flows, and managing technology risks.
- Technological and adoption hurdles: Infrastructure, user-education, trust, and integration into existing financial systems.
- Sovereignty & monetary policy implications: As noted, stablecoins may affect a central bank’s ability to manage money supply and currency. Dawn
What this Means for Pakistan’s Economy & Finance Sector
- The move signals a shift: Pakistan is no longer merely reacting to digital asset trends but proactively seeking to embed itself in the digital currency ecosystem.
- Banks, fintech firms and payment service providers may gain opportunities (and competition) in developing wallets, platforms and interoperability.
- If successful, this could enhance Pakistan’s attractiveness for fintech investment, especially in South Asia.
- On the flip side, failure to get regulation, backing or technology right could lead to high cost, reputational risk or missed opportunities.
Timeline & What to Watch Next
- Short term: Expect regulatory announcements, pilot frameworks, public-private partnerships.
- Mid term (12-24 months?): Actual pilot launches of CBDC; test issuance of rupee-backed stablecoin in limited markets.
- Long term: Full rollout of stablecoin and/or CBDC; integration with global payments rails; measurable financial-inclusion impact.
- Watch for announcements from SBP, PVARA, and international partners (e.g., World Bank) for key milestones.
Conclusion
Pakistan’s exploration of a rupee-backed stablecoin is a bold and timely move in the digital finance era. With significant economic opportunity, financial-inclusion goals and infrastructure needs driving the agenda, the country is positioning itself to harness next-generation payment technologies. However, success will depend heavily on execution: regulatory clarity, technical robustness, currency stability and user-trust. If done well, this initiative could mark a major step forward for Pakistan’s financial ecosystem.
