Navigating Global Cryptocurrency Governance: Pakistan’s Regulatory Response to FATF and IMF Standards through Compliance, Conflict, and Cooperation (2018–2024)

Abstract

In this paper, the response of the Pakistan to international cryptocurrency regulations is critically examined through the prism of the interrelated concepts of compliance, conflict and cooperation. The proliferation of cryptocurrencies has greatly altered the financial systems of the world, forcing states to implement regulatory systems in harmony with those of the world. However, in the case of the emerging economies as in Pakistan, regulations alignment is not as straightforward as it seems, due to the institutional weaknesses, economic turmoil and political divides. It is a qualitative research paper which includes policy analysis, stakeholder perceptions and comparative perceptions in order to assess the role of involvement and participation of Pakistan with the international regulatory organizations like Financial Action Task Force (FATF) and the International Monetary Fund (IMF). The results indicate that, Pakistan is partially adherent to the international regulatory standards especially to the areas of the anti-money laundering (AML) and counter-terrorism financing (CTF), but is in violation of enforcing the rules because of the absence of robust institutional framework and inability to synchronize regulatory initiatives. In addition, internal strife, resistance of traditional financial institutions, poor digital literacy and lack of infrastructural facilities are some of the major impediments to regulation development. However, these challenges do not rule out the prospects of an enhanced international partnership, which will play a crucial role in ensuring that Pakistan develops a balanced regulatory system that will aid in achieving financial stability, and technological innovation. The study finds that an integrated, coordinated, and adaptative regulatory framework is a key to ensuring that Pakistan can become a part of the global digital financial ecosystem and ensure that it considers its socio-economic realities (Arner et al., 2022; FATF, 2021; Khan et al., 2022).