Legislation on cryptocurrency: FBR starts consultations with experts

ISLAMABAD: On the directives of the Federal Tax Ombudsman (FTO), the Federal Board of Revenue (FBR) has started consultation with experts for legislation to formally introduce cryptocurrency in Pakistan.

The FBR is also exploring options of taxing money/profits generated and assets created through the deals of digital currency.

According to a directive of the FTO to the Federal Board of Revenue (FBR), a complaint has been filed with the FTO regarding cryptocurrency. The complainant requested that FBR clarify its tax policy on the issue of cryptocurrency. There are 560 million users of digital currency worldwide, and of these, nine million users are in Pakistan.

SBP agrees, in principle, to legalise digital currencies

Pakistan is the sixth-largest country in the world to adopt cryptocurrency. The State Bank of Pakistan issued a circular on April 6, 2018, regarding Risks of Virtual Currencies, but did not declare virtual currency as illegal.

Pakistan’s cryptocurrency market is experiencing rapid growth, with increasing interest from both individual investors and institutional players, the FTO maintained.

The FTO has taken notice that huge commercial transactions are carried out in cryptocurrency outside the ambit of the tax regime. It’s a height of neglect, inattention, and ineptitude on the part of FBR.

As far as international best practices are concerned, under the Financial Crimes Enforcement Network, crypto miners are considered money transmitters, so they may be subject to the laws that govern that activity.

It is pertinent to note that money/ profits generated and assets created through dealings in cryptocurrency will remain undocumented/ untaxed, unless this regime is streamlined by introducing legal provisions and regulated through well-defined rules. Grappling with the menace of massive evasion, this newly emerging window can ease some of the government’s revenue constraints.

The Policy Wing of the FBR has confirmed that the matter is of a technical nature and is under consideration in consultation with the experts on the subject.

Earlier, the FBR was advised to take the complainant and all stakeholders on board for input and make sure that this potential avenue is tapped and streamlined through the forthcoming Finance Bill, in consultation with other core stakeholders. The legislation on cryptocurrency shall broaden the tax base, which is pending so far before the Policy Wing of the FBR and needs to be properly addressed on a priority basis, the FTO added.

Copyright Business Recorder, 2025