On May 28, 2025, Pakistan announced a bold and historic initiative to establish a strategic Bitcoin reserve, turning over a new leaf from its previous anti-crypto stance.
Pakistan National Crypto Council Chief Executive Officer Bilal Bin Saqib unveiled the initiative at the three-day Bitcoin 2025 conference, held in Las Vegas, which began on May 27, 2025.
The initiative includes the creation of a sovereign Bitcoin wallet—a digital tool that stores encrypted credentials to access a public address and enable transactions—to hold these assets indefinitely, with a commitment never to sell them.
While cryptocurrency has been in global headlines for over a decade, the idea of using it as a strategic reserve raises serious economic, security, and national interest concerns—particularly for a country like Pakistan.
How crypto works
Cryptocurrency is a decentralised digital currency that uses cryptography and blockchain technology to enable peer-to-peer transactions without the oversight of central banks.
Unlike traditional fiat money, cryptocurrencies like Bitcoin are not issued or controlled by any central authority, making them highly volatile and subject to rapid price fluctuations.
Their volatility and lack of regulation make it both attractive to speculators and dangerous for state actors, a double-edged sword for any country looking to embrace them.
United States National Institute of Standards and Technology defines cryptocurrency as “a digital asset/credit/unit within the system, which is cryptographically sent from one blockchain network user to another. In the case of cryptocurrency creation, the publishing node includes a transaction sending the newly-created cryptocurrency to one or more blockchain network users. These assets are transferred from one user to another by using digital signatures with asymmetric-key pairs.”
A strategic reserve typically refers to assets held by a government or central bank to manage economic stability, ensure liquidity, and provide a buffer against external shocks.
Traditionally, these reserves consist of stable, liquid assets such as gold, oil or foreign currencies with minimal volatility.
Despite the enthusiasm surrounding cryptocurrencies, there is a growing body of evidence highlighting the significant risks, vulnerabilities, and criminal activities associated with crypto assets.
These hazards underscore why cryptocurrencies are ill-suited to serve as a reliable strategic reserve for a country like Pakistan—they may promise the moon, but often deliver a ticking time bomb instead.
Global crypto crimewave
The cryptocurrency sector has been repeatedly targeted by massive thefts, hacks, and scams. For instance, the Bybit exchange—itself a crypto-exchange—suffered a $1.5 billion theft, described by The Guardian as the “biggest digital heist ever”.
Brazil experienced its largest bank breach with hackers stealing $180 million in cryptocurrencies, as reported by Digital Watch—a Swiss digital policy observatory.
Likewise, TRM Labs—a US-based blockchain intelligence platform working to build a safer financial system—detailed that the US Department of Justice has used organised crime statutes to prosecute cases—involving $263 million in cryptocurrency theft, money laundering, and home invasion conspiracies—highlighting the violent and organised nature of some crypto crimes.
According to Reuters, about $1.2 billion in cryptocurrency has been stolen since 2017, with losses from hacks jumping to $2.2 billion in 2024 alone.
Medha Singh, in his article published in Reuters, says, “Among the most notable hacks are the theft of more than $305 million from Japan’s crypto exchange DMM Bitcoin in May and the loss of $235 million from India’s WazirX in July.”
Dark side of digital currency
TRM Labs reports in a recent study that criminals use physical violence or threats to coerce victims into giving up access to their crypto wallets.
Thefts targeting high-net-worth individuals have become more common, as detailed by Holland & Knight, which reports that an unknown hacker stole approximately $40 million in bitcoin from the victim’s cryptocurrency wallets, which demonstrates the personal security risks tied to crypto holdings.
Large-scale money laundering operations have exploited cryptocurrencies’ pseudonymous nature. TRM Labs reported that The Niflheim operation in Brazil uncovered a network laundering nearly $9.7 billion in crypto, illustrating the scale of illicit activity.
The blending of cybercrime with traditional criminal activities—including home invasions and scams—shows crypto’s vulnerability to exploitation by organised crime groups.
Sanctions and crypto evasion
Iran’s cryptocurrency exchange Nobitex was hacked for over $90 million by an Israel-linked group, with stolen funds effectively “burned” as a political statement, according to the reports of The Guardian, Reuters and the Wall Street Journal.
Elliptic—a consultancy specialising in crypto-related crime—states that “The hackers appear to have in effect burned those funds, rendering them inaccessible by storing them in vanity addresses for which they do not have the cryptographic keys.”
Tom Robinson, Elliptic’s co-founder, said it would take current computer technology “billions of years” to create the cryptographic key pairs that match the vanity addresses.
Iran’s use of Bitcoin mining to evade international sanctions further complicates the geopolitical landscape of crypto assets, making them a risky and unpredictable reserve, according to an article by Babel Street.
The Chainalysis 2025 Crypto Crime Report reveals a sharp surge in cryptocurrency hacks, particularly targeting decentralised finance (DeFi) platforms, where lax security and rapid growth have made them prime targets for theft.
Meanwhile, Forbes detailed Argentina’s staggering $4.6 billion crypto scandal—dubbed the largest-ever crypto theft—after a government-promoted token collapsed within hours, which devastated tens of thousands of investors and fuelled political and legal fallout.
Together, these incidents highlight the profound risks and instability inherent in cryptocurrencies, underscoring why they remain unsuitable for use as national strategic reserves.
Easy money, hard lessons
Pakistanis, by nature, are very eager to secure their financial futures amid economic instability. They are proven vulnerable to “get rich quick” and “easy money” schemes.
According to Arab News, Pakistan is among the top countries for crypto adoption with 20 million users. Another story by the Arab News paints a grim picture of thousands of Pakistanis losing life savings in 100 million crypto scams.
Stories abound of victims, including one who sold his mother’s gold to invest, only to be left high and dry when fraudulent apps crashed and their funds vanished.
This susceptibility highlights how the lack of clear regulation, combined with the lure of easy money, has made ordinary citizens easy targets for large-scale crypto frauds.
The regulatory environment for cryptocurrencies remains fragmented and uncertain globally. This creates risks for governments holding crypto reserves, as sudden legal changes or crackdowns can severely impact asset liquidity and value.
Custody of crypto assets requires advanced security measures to prevent loss or theft of private keys, a risk not present with traditional assets like gold or oil. Babel Street has tracked Bitcoin’s growing acceptance to understand the currency’s potential impact on global risk.
Digital money presents new challenges to the international community, providing a mechanism for conducting transactions that bypass trade restrictions.’
Volatility meets vulnerability
One of the fundamental concerns about adopting cryptocurrency as a strategic reserve lies in its decentralised nature, which fundamentally clashes with the architecture of traditional banking systems.
Most banking organisations worldwide operate under the supervision and guarantee of central banks relevant to their geographical location.
For example, in Pakistan, banks are covered under the State Bank of Pakistan, which assures customers that their deposits are secure. This guarantee builds critical trust in the banking system.
However, cryptocurrencies are designed to be peer-to-peer networks without any central authority or intermediaries.
Unlike conventional money systems, where each transaction is verified and guaranteed by centralised institutions, cryptocurrency transactions are recorded on blockchain ledgers that operate across a decentralised network of nodes without a central verifying entity.
Each participant on the blockchain network keeps a copy of the ledger and agrees to predetermined rules to validate transactions.
Assurance Financial—a residential mortgage banker—states in its blog titled ‘How Blockchain Technology Is Impacting the Mortgage Industry’ that while transaction records in the blockchain are public, the identities behind them are pseudonymous, complicating oversight and regulatory control.
This decentralisation offers no recourse to deposit insurance—no safety net in times of crises—and no central authority to regulate or support during financial crises, raising daunting questions about systematic stability.
What happens when the banking system and the broader economy begin to rely heavily on decentralised cryptocurrencies, putting all eggs in one basket—especially one known for its volatility?
And what mechanisms would exist to enable urgent, system-wide financial interventions during an economic crash, when immediate liquidity or capital injection is required?
Experts warn of systemic risks as cryptocurrencies become mainstream. A critical concern is that central banks could become redundant in the event of a major financial collapse if decentralised currencies dominate.
Research article published in International Journal of Theoretical & Computational Physics titled ‘What Is the Cryptocurrency? Is it a Threat to Our National Security, Domestically and Globally?’ says, “If they become truly mainstream, bitcoin and other cryptocurrencies represent a systemic threat to the entire banking system.
During the Global Financial Crisis, central banks and governments could act together to defend economies, but if a decentralised cryptocurrency becomes the norm, then economies globally are arguably sitting ducks. In a major collapse, central banks would be redundant—it would be like turning up to a gunfight with a knife.”
Gold: The trusted standard
Gold is a historically proven store of value, with low volatility, universal acceptance, and no counterparty risk. Unlike cryptocurrencies, gold’s physical nature and centuries of use as a reserve asset make it a reliable hedge against economic shocks and geopolitical uncertainty.
Many countries continue to build and maintain gold reserves as a core part of their foreign reserves, ensuring stability and trust in times of crisis. Gold does not expose nations to the risks of cybercrime, regulatory uncertainty, or violent theft associated with cryptocurrencies.
While Pakistan’s ambition to innovate with a government-led Bitcoin strategic reserve reflects a desire to modernise and attract investment, the deep hazards, documented scams, and vulnerabilities of cryptocurrencies make them an unsafe choice for a country’s reserves.
The extensive evidence of thefts, violent crimes, money laundering, and geopolitical risks from multiple global reports demonstrates that crypto remains a highly unstable and insecure asset class.
Given these risks, Pakistan would be far better served by building its strategic reserves in gold, aligning with global best practices and ensuring long-term financial security and stability.
As Pakistan stands at a crossroads, the nation must critically consider: Is this crypto venture a path to strategic reserves, or does it usher in a new era of strategic risk?
The answer to this pressing question will ultimately shape the economic resilience and security of the country for years to come!
