Digital Assets
Pakistan Eyes Bitcoin Reserves: Will the IMF Sign Off?
Bitcoin (BTC +0.44%), the trillion-dollar market cap decentralized asset with a fixed supply, is gaining significant traction as a strategic reserve asset.
From institutions, corporations, and sovereign wealth funds to governments, everyone is turning to the cryptocurrency king to hedge against inflation, achieve financial stability, and strengthen economic sovereignty.
Much like how gold is held by central banks who take advantage of its liquidity, safety, and returns to diversify foreign exchange holdings, protect against currency fluctuations, and provide a stable store of value during periods of global uncertainty and geopolitical risk, the digital gold is being explored by national governments as part of their strategic financial reserves.
Having BTC in a nation’s reserve further reduces their reliance on traditional banking systems and centralized financial institutions. Bitcoin basically offers a unique opportunity for asset diversification, as its digital infrastructure, decentralized nature, and fixed supply make it an appealing store of value.
Bitcoin as a reserve asset isn’t really a recent development, but it certainly gained traction when US President Donald Trump vowed to deregulate cryptocurrency and introduce a Strategic Bitcoin Reserve (SBR). The promise made on the campaign trail was finalized this year when Trump signed an executive order to make Bitcoin part of the nation’s reserve.
Trump has also established a Working Group on Digital Asset Markets and tasked it with figuring out how such a reserve would work.
Following the US, other nations are also rushing to stockpile BTC for their very own Bitcoin reserves. This includes Pakistan, the fifth-most populous country in the world, which ranks ninth in the Global Crypto Adoption Index, according to Chainalysis’ 2024 report.
Pakistan’s Bitcoin Plan: Regulation Plus Reserve
Pakistan first expressed its interest in crypto assets earlier this year when the government initiated the exploration of a “National Crypto Council” to oversee the development of a comprehensive regulatory framework for digital assets and to attract foreign investment.
The council introduced various proposals, including making use of excess energy to mine Bitcoin as well as power AI data centers. A few months after that, the Council announced the allocation of 2,000 megawatts of surplus energy to mine Bitcoin and power high-performance computing data centers. A plan to accumulate BTC for a national treasury was also put forward by the Council.
Bilal Bin Saqib, the boss of the country’s crypto council, then revealed Pakistan’s plan to follow in the footsteps of the US in establishing its own reserve of Bitcoin in late May this year at the Bitcoin 2025 conference.
“Today is a very historic day. The Pakistani government is setting up its own government-led Bitcoin Strategic Reserve, and we want to thank the United States of America again because we were inspired by them.”
– Saqib made an announcement at the conference
In his speech, Saqib shared that Pakistan has established a national BTC wallet and that it is “holding digital assets already in state custody – not for sale or speculation, but as a sovereign reserve.”
He also invited builders to create for the unbanked and scale with the country’s youth and “unstoppable grit.”
Pakistan, he said, isn’t defined by its past anymore but rather is “being reborn as a forward-looking hub of digital innovation, powered by its youth, sharpened by necessity, and led by a new generation of tech statesmen.”
At the time, he also said that the South Asian country is also in support of adopting crypto-friendly policies, a move that represents a shift in the government’s stance on cryptocurrencies, which are considered illegal in the country.
Amidst all this, Binance co-founder Changpeng Zhao was also appointed as one of the advisers to the Council on the subjects of blockchain adoption, regulations, and infrastructure.
Even Trump’s DeFi protocol, World Liberty Financial (WLFI), offered the country help to build its DeFi architecture, tokenize real-world assets (RWA), and experiment with the broad sector. Their scope of cooperation includes the launch of “regulatory sandboxes” to test blockchain products to help with the “responsible growth” of crypto in the country.
The Ministry of Finance, meanwhile, created a new regulatory body, Pakistan Digital Asset Authority (PDAA), to regulate and promote blockchain technology and digital assets. Besides establishing a formal regulatory framework, the body is to issue licenses and oversee DeFi applications, stablecoins, and wallet custodians.
Pakistan Strengthens US Crypto Ties
After announcing that Pakistan will establish a Bitcoin Reserve, crypto minister Saqib shared feeling even more confident about his idea and called the Bitcoin conference, “a statement.”
“It was a gathering of minds who were early adopters, people who believe in financial freedom, people who believe in building a more inclusive economic future.”
– Saqib said in a recent interview with a media publication
After the event, which was attended by the US vice president and other government officials, Saqib was reportedly at the White House a few days later where he met with Robert “Bo” Hines, executive director of the US Council on Digital Assets and represented Pakistan as a “forward-looking, tech-driven nation unafraid to engage in this new area of finance.”
Saqib’s discussions with Hines went beyond Bitcoin reserves to also include stablecoins and “building bridges” between the two countries, especially the innovation of the US and the young generation of Pakistan. Both countries will work closely on knowledge building and sharing. He added:
“We want to learn on different frameworks from the US, whether it’s on setting up the wallet or the genius coin act. We are looking at the US because they are inspiring, not just us, but the whole world.”
Saqib also talked about having a discussion with Michael Saylor, the executive chairman of the world’s largest public holder of Bitcoin. Strategy currently holds 597,325 BTC, which amounts to 2.84% of the total Bitcoin supply. This accumulation was made for about $42.4 billion at an average price of almost $71K per coin. As of writing, BTC price is trading at around $107,600, only 3.8% away from its peak of almost $112,000 that was hit a month ago.
Bitcoin USD (BTC +0.44%)
The discussion with Saylor made Saqib even more bullish on Bitcoin and more certain about the country’s decision to stockpile BTC.
But while Strategy offers yield to its holders relating to an increase in BTC price, the country, per him, is planning to grow its Bitcoin holdings with yield earned from DeFi protocols.
Last month, Saqib had another discussion with Saylor, this time it was a Zoom call that also involved Pakistan’s Finance Minister Muhammad Aurangzeb. They asked Saylor to join in as an advisor for the country’s newly adopted Strategic Bitcoin Reserve.
For this, they are planning to use the assets that were seized from criminal activities and are “just sitting idle with the law enforcement agencies.”
So, Pakistan isn’t yet an active buyer of BTC, but it does have “a budget-neutral policy” with its subsequent move being setting up a Bitcoin wallet and deploying it in DeFi for passive income.
“We will put our Bitcoin on DeFi so we can earn yield on them.”
– Saquib, a London School of Economics graduate and the CEO of the Pakistan Crypto Council
Overall, the idea is to make sure that Pakistan leads the digital asset race in emerging economies, though the path to that is going to be slow and risk-mitigated.
While helping Pakistan become the leader, Saqib also urged countries around the world to implement a digital assets committee, as the reality is that crypto “is the fastest-growing industry.” He added:
“The youth in other countries should definitely canvas, lobby, and pressure their decision makers to believe that this is the future of finance, and they should make sure that they are not left behind.”
The road to crypto leadership, however, won’t be easy for Pakistan as the country is facing pushback from the International Monetary Fund (IMF).
High-Risk Bitcoin Reserves: Opportunities & Warnings
Following in the footsteps of the Trump administration and announcing a sovereign Bitcoin reserve powered by unused electricity to monetize energy oversupply and attract foreign tech investors, Pakistan has made some serious steps this year, as we have noted.
Just last month, the government began the process of reviewing proposals for a regulatory framework with an aim to align it with global standards as well as evolving trends.
As Finance Minister Aurangzeb said, the Pakistani government is committed to creating a “future-ready financial infrastructure” that promotes innovation while being regulatory compliant and maintaining financial stability.
Experts argue that this move can help the country deal with its currency instability as well as diversify the economy, if managed well, that is.
Benjamin Grolimund of crypto trading platform Flipster sees this as a “fascinating undertaking of the interplay between energy economics, monetary policy, and tech ambition,” which requires a balancing act and a healthy dose of realism.
Bitcoin Association Pakistan partner Luqman Khan believes that the nation stands to earn about $1 billion in annual revenue by redirecting 2,000MW of its unused power, assuming the BTC price is around $100,000 and mining operations have over 90% uptime.
A reserve of non-tradable bitcoin is meant to be about long-term economic positioning, helping the country protect itself against inflation, with the Pakistani rupee depreciating by over 50% against the USD in the last five years.
According to Khan, accumulating just 10,000 BTC, which would put the reserve at $1 billion at current prices, would “stabilize its balance sheet against future currency shocks, much like gold reserves do but with higher growth potential. Bitcoin, he notes, is “a long game” that can provide Pakistan with a “structural transformation.”
Not everyone is in favor, though. Many are calling this a high-risk strategy that could strain the fragile power grid of the nation and expose it to the intense market volatility of the crypto sector.
All these hurdles “make it a high-risk endeavor,” said David Krause, an associate professor of finance at Marquette University, adding that he’s “skeptical, much like the IMF, about its viability.” He specifically pointed to a future event when prices decline, rendering Bitcoin a “significant liability” rather than an asset for the struggling economy.
On top of it all, the South Asian country has to overcome objections from the IMF, which is one of its key lenders.
IMF Concerns Over Pakistan’s Bitcoin Reserve Plans
The International Monetary Fund (IMF) is a financial agency that was established in 1944 at the Bretton Woods Conference in the aftermath of the Great Depression. It was founded by 44 member countries and has since grown to 191 countries that govern the agency as well as hold it accountable.
As per the official IMF website, it is capable of lending as much as $1 trillion to its member countries.
The agency, which is the leading supporter of exchange-rate stability, is regarded as the global lender of last resort to governments around the world. Its mission is to facilitate international trade, promote sustainable economic growth, and foster global monetary cooperation.
Its other focus areas include monitoring and analyzing global fiscal trends and countries’ ability to carry debt.
A couple of months ago, the IMF Executive Board approved the disbursement of $1 billion, to Pakistan under its Extended Fund Facility (EFF). The approval follows the IMF’s review of the country’s progress under the EFF program and was the second loan tranche that brings total disbursements under the arrangement to over $2 billion.
As per the IMF, implementing sound macro policies such as rebuilding international reserve buffers to achieve macroeconomic sustainability is among the key priorities of Pakistan’s 37-month EFF.
“Pakistan has made important progress in restoring macroeconomic stability despite a challenging environment. Since the approval of the Extended Fund Facility, the economy continues to recover, with inflation sharply lower and external buffers notably stronger.”
– Chair Nigel Clarke
However, he noted that with risks remaining elevated, particularly from global economic policy uncertainty, rising geopolitical tensions, and persistent domestic vulnerabilities, “the authorities need to maintain sound macroeconomic policies and accelerate reforms to safeguard the macroeconomic gains and underpin stronger and sustainable, private sector-led medium-term growth.”
Less than a year after that, the IMF has raised concerns over Pakistan’s decision to allocate its electricity to Bitcoin mining and requested the Finance Ministry for clarification regarding the legality of operations, as the country struggles with fiscal pressures and energy shortages.
The agency was reportedly not consulted before the move. The IMF has also raised concerns over the potential impact on resource distribution and is conducting sessions with government officials on the matter.
“There is a fear of further tough talks from the IMF on this initiative,” an official involved in the ongoing negotiations was reported as saying at the time. “The economic team is already facing stiff questions, and this move has only added to the complexities of the talks.”
Interestingly, this isn’t the first time that the IMF has raised questions about a country’s crypto move. Back in 2021, when El Salvador became the first nation to announce Bitcoin as legal tender, the agency also opposed that.
Despite that, the Central American government under the leadership of President Nayib Bukele continued to add to its Bitcoin reserves and now holds more than 6,200 BTC. Over the past four years, the IMF maintained its efforts to ensure the total coins held in government wallets don’t increase, to no success.
Recently, the IMF reiterated its push for the country to freeze Bitcoin acquisitions under the terms of a $1.4 billion loan deal. This came after IMF staff and El Salvadoran authorities reached an agreement on the first review of the 40-month EFF tied to economic reforms.
While direct Bitcoin purchases had been stopped by Bukele’s administration in order to comply with the loan deal, the government was able to continue its small daily acquisitions without any violations by having the Bitcoin Office operate outside the defined fiscal sector.
“In terms of El Salvador, let me say that I can confirm that they continue to comply with their commitment of non-accumulation of Bitcoin by the overall fiscal sector, which is the performance criteria that we have.”
– Rodrigo Valdes, the IMF Western Hemisphere Department Director, said during a press briefing in April
As part of legal reforms, El Salvador has removed the mandatory legal tender status of Bitcoin, along with eliminating its usage for paying taxes, but kept it as an optional currency, which allows it to accumulate BTC under the IMF’s watch.
Navigating Global Monetary Policy and Bitcoin Reserves
With its mission to safeguard global financial stability and regulate fiat currencies that are fundamentally different from Bitcoin, the IMF is expected to keep its cautious approach towards cryptocurrencies for years to come.
After all, the decentralized Bitcoin with a fixed supply and no ties to any government or central bank aims to disrupt traditional monetary systems, which are under the control of central authorities. A currency operating outside the conventional framework that the IMF supervises challenges its ability to exert control over its monetary policy and financial stability.
The rapid growth of the crypto sector and its high volatility, meanwhile, have the IMF concerned about risks to financial stability, capital flows, and consumer protection.
Against this backdrop, the international agency’s stance on Bitcoin and crypto, in general, has always been discouraging, urging nations to limit their adoption and calling for proper oversight.
However, in March, the IMF finally covered Bitcoin and stablecoins in its Balance of Payments Manual (BPM7), marking a shift in how crypto is measured and setting a global standard for tracking crypto-related financial activity.
Despite this, the IMF is expected to take significant time before softening its stance on Bitcoin and other cryptocurrencies. Such a move would likely involve a global regulatory framework that addresses risks like AML/CFT, cyber threats, fraud, and others while allowing countries to retain control over their monetary policy.
So, against this backdrop, Pakistan is pursuing a bold ambition with its sovereign Bitcoin strategic reserve, signaling a major shift in how emerging economies might harness decentralized assets to strengthen their financial systems. However, for them to really realize this vision would require balancing the plans against the caution of international lenders like the IMF.
Whether Pakistan can successfully navigate this rough environment will determine if its Bitcoin strategy becomes a model or a cautionary tale!
