KARACHI – Pakistan is witnessing a massive outflow of foreign exchange as nearly $600 million has allegedly been diverted into illegal cryptocurrency transactions, raising serious concerns over financial stability and regulatory loopholes.
According to officials from the Exchange Companies Association of Pakistan, customers are purchasing US dollars from licensed exchange companies, depositing them into their foreign currency accounts, and later withdrawing the money to invest in unregulated crypto platforms. This shift has created a severe leakage in the system, with only $400 million remaining within FCY accounts while the rest has vanished from the formal economy.
The trend has already taken a toll on banking channels. Dollar sales to the banking sector have fallen from around $4 billion in the same period last year to only $3 billion this year, indicating a sharp drop in legitimate forex movement. Industry watchers warn that this diversion, if left unchecked, could intensify pressure on the rupee and strain Pakistan’s already thin reserve buffers.
In response, the State Bank of Pakistan has issued fresh directives instructing commercial banks and exchange companies to stop providing cash dollars and directly deposit such transactions into customer accounts. However, experts caution that this measure alone may not fully curb the trend, as funds moved into accounts can still be withdrawn later and channelled into crypto markets.
With Pakistan attempting to stabilise its foreign reserves and regain financial ground, the unchecked crypto-driven outflow presents a silent but growing threat to economic recovery. Analysts argue that without stronger oversight, Pakistan risks losing more hard currency to digital grey markets at a time when financial discipline is crucial.
This story has been reported by PakTribune. All rights reserved.