Pakistan has suffered significant losses due to illegal cryptocurrency transactions, and the following outlines several preventive measures to curb such practices moving forward.

The country reported losses exceeding USD 600 million stemming from illicit digital asset activities. Authorities state this trend has drastically reduced dollar inflows into the banking system, as citizens now prefer purchasing dollars from foreign exchange companies and converting them into crypto assets through unofficial channels.
“In 2025, we sold approximately USD 4 billion to banks—a figure that dropped to USD 3 billion over the same period this year. Most of these missing dollars were invested in cryptocurrency,” said Malik Bostan, Chairman of the Pakistan Foreign Exchange Dealers Association.

Bostan highlighted that individuals purchasing dollars from exchange firms now deposit them into their Foreign Currency Accounts (FCYs), from which they withdraw funds to buy digital assets via illegal methods.

Malik Bostan noted that between January and October this year, Pakistani citizens deposited roughly USD 400 million into FCYs, and over USD 600 million has left the country without a trace. The State Bank of Pakistan recently issued directives instructing banks and exchange companies to cease cash disbursements, permitting transfers only directly into users’ FCYs for deposit purposes.

Under this new directive, crypto exchange firms may now issue checks or transfer funds directly into users’ FCY accounts. However, Bostan emphasized that these deposited dollars are subsequently withdrawn from bank FCYs and used to purchase digital assets. Reports indicate dollar sales to banks have sharply declined in the first four months of this year, despite stringent surveillance at borders with Afghanistan and Iran.

Data shows foreign exchange firms sold USD 280 million in July (USD 333 million in 2024), USD 163 million in August (USD 295 million in 2024), USD 186 million in September (USD 214 million in 2024), and USD 244 million in October (USD 297 million in 2024). Total sales to banks over this period amounted to approximately USD 1.139 billion—a 23% decline during the first four months of 2025. Meanwhile, State Bank data reveals commercial banks’ dollar holdings have increased.

The country has faced severe dollar shortages for years and narrowly avoided default in 2023. Following an IMF bailout, the government collaborated with monetary authorities to impose import restrictions aimed at reducing trade and current account deficits. Pakistan has also launched crackdowns on illegal trading and dollar smuggling. Although such illicit activity is now under control, the emerging trend of crypto investment risks undermining foreign exchange conservation efforts.

Pakistan’s government is now preparing to enter international financial markets through new bond issuances and is expanding into China’s market via Panda bonds. Current State Bank foreign exchange reserves stand at approximately USD 14.551 billion, with projections indicating a rise to USD 17 billion by the end of fiscal year 2026. Higher remittance inflows further enable the central bank to service debt obligations while maintaining reserves above USD 14.5 billion.

Currency experts anticipate the IMF will disburse USD 1.2 billion, expected to further bolster Pakistan’s reserve position. Meanwhile, Pakistan continues advancing its national crypto initiative. The country recently invited international crypto exchanges to apply for local operating licenses to expand their regional presence. According to Bilal bin Saqib, Chairman of the Pakistan Virtual Assets Regulatory Authority (PVARA) and State Minister for Crypto and Blockchain, the government seeks partnerships with these firms to build a transparent digital financial future for Pakistan.

Pakistan is not alone—several other nations and institutions have faced similar challenges. As of November 2025, the crypto sector continues confronting issues related to illicit transactions, despite intensified regulatory and monitoring efforts. Below is a summary of major global crypto-related illegal transaction cases in 2025:

1. Bybit and KYC Abuse Case (January 2025)
   Location: Singapore & Dubai
   Summary: Crypto exchange Bybit was accused of processing hundreds of millions of dollars in transactions from users with forged Know Your Customer (KYC) documents. Singaporean authorities temporarily suspended Bybit’s operating license.
   Impact: Heightened global pressure on exchanges to enforce stricter identity verification protocols.
   

2. “Silk Road 3.0” Darknet Operation (March 2025)
   Location: Global, led by FBI, Europol, and Interpol
   Summary: A joint operation dismantled a Tor-based darknet marketplace using Monero (XMR) and Bitcoin via mixing services. Over 200 accounts linked to drug and weapons trafficking were arrested, with total transaction volume reaching USD 1.2 billion since 2023.
   Impact: Sparked global debate on balancing privacy and security in digital asset usage.
   

3. Mixin Network Case (April 2025)
   Location: China & Southeast Asia
   Summary: Mixin Network—a crypto-based financial services platform shut down in 2023—re-emerged under a new name and became embroiled in a global Ponzi scheme. Chinese and Thai authorities launched a joint investigation after thousands of victims reported losses totaling USD 500 million.
   Impact: Exposed weaknesses in cross-jurisdictional oversight of DeFi projects and centralized wallet services.
   

4. Money Laundering via Stablecoins by Mexican Drug Cartels (June 2025)
   Location: Mexico & United States
   Summary: The U.S. Department of the Treasury (OFAC) identified the use of USDT (Tether) and USDC in money laundering networks operated by the Sinaloa cartel. Transactions occurred through non-KYC exchanges and P2P services.

Illegal transaction cases must serve as critical learning opportunities for all stakeholders, enabling improved oversight and vigilance toward this relatively new digital economic sector. While many are familiar with cryptocurrency concepts, far fewer fully grasp the associated risks. The impact of illicit activity may seem negligible to the general public, yet it poses a severe threat to financial stability—potentially disrupting well-established economic frameworks.

Key individual-level safeguards against illicit crypto activity include:

1. Use reputable, well-regulated exchanges. Major platforms like Binance, Bybit, Bitget, and Coinbase hold international licenses. Regional/local exchanges may also be licensed—but thorough due diligence remains essential. Institutions must consistently enforce KYC (Know Your Customer) and AML (Anti-Money Laundering) standards.
   

2. Avoid anonymous transactions with unclear counterparties. Always utilize wallets or exchanges that are trustworthy and legally authorized, whether internationally or regionally.
   

3. Track and record all transactions—not only for tax compliance but also to maintain transparent personal financial oversight.
   

4. Remain vigilant against scams and fraudulent schemes, especially during new token launches—where rugpulls (sudden price crashes post-fundraising) commonly occur. Always conduct rigorous research before investing.
   

5. Prefer personal wallets over shared ones to prevent unauthorized use. Personal wallets fall into two categories: cold wallets (hardware-based, e.g., Trezor—offline, highly secure) and hot wallets (software-based, e.g., Trust Wallet, MetaMask—online, convenient).
   

For institutions and financial authorities, strategic recommendations include:

1. Strengthen national and international regulatory frameworks through dedicated crypto legislation—e.g., mandating real-time transaction monitoring and rigorous pre-approval audits for token listings.
   

2. Deploy blockchain analytics tools to detect suspicious activity, including terrorist financing and transnational criminal networks.
   

3. Enhance public financial literacy via sustained educational programs on digital assets—since informed citizens form the bedrock of a healthy, sustainable digital economy.
   

4. Integrate crypto assets into national tax systems and foster cross-sector collaboration—among regulators, industry players, and law enforcement—to ensure security and integrity in digital economic transactions.