Pakistan is taking significant steps towards crypto legalization. The government has proposed amendments to the State Bank of Pakistan (SBP) Act, which would allow the central bank to issue digital currency and manage the country's finances in both physical and digital forms ¹ ² ³.

This move marks a significant shift in Pakistan's stance on cryptocurrencies. Previously, the country's central bank had banned cryptocurrencies like Bitcoin, citing concerns over their volatility and potential use for illicit activities ¹ ⁴.

The proposed amendments would also grant the SBP the power to conduct "central bank digital currency" business, allowing CBDCs to operate as a legal tender ² ³. Additionally, the SBP plans to establish a subsidiary to develop and operate digital payment systems.

While no specific timeline has been announced for federal cabinet approval of the amendments, this development could pave the way for regulatory oversight and the integration of digital currencies into Pakistan's financial framework ³.

It's worth noting that one of Pakistan's provinces, Khyber Pakhtunkhwa, has already urged the federal government to legalize cryptocurrencies ⁵. This growing support for crypto adoption could contribute to a more favorable regulatory environment in the country.