In a bid to accelerate the adoption and regulation of virtual assets, the federal government announced the formation of the Pakistan Virtual Assets Regulatory Authority (PVARA) last week. According to reports, the body will serve as an independent regulator, responsible for aligning guidelines laid out by the Financial Action Task Force (FATF) and other international practices.

However, Indian media reports have portrayed Pakistan’s positive developments in a negative light. One such report claimed that Pakistan’s dealings with US-based firms, namely World Liberty Financial (WLF) and Fr8Tech, surrounding virtual assets, were attempts to “curry favour with political players in Washington”.

Moreover, Indian reports push a political narrative, suggesting that the military forces will soon take over the country’s digital asset landscape. The report claims that the virtual asset bodies will soon be dominated by military officials, just as the 36 active-duty officers “reportedly” control the Special Investment Facilitation Council (SIFC).

However, it merits a mention that PVARA was created by formal democratic channels, with no evidence of military involvement. A statement from the Ministry of Finance (MoF) last week stated that the federal cabinet's approved the “summary” for the regulatory body.

The report also brings to light questions by “sceptics” regarding Pakistan’s ability to afford a digital transformation, as it suggests that Pakistan’s decision to allocate 2,000 MW of power to bitcoin miners and AI data centres was met by fierce resistance from the International Monetary Fund (IMF). However, Pakistan’s Power Division and the IMF jointly rubbished these claims as no formal objection had been logged by the international lender.

While India criticises Pakistan’s crypto adoption, the integration of digital assets into the economic structure of Pakistan could result in the creation of high-tech jobs while potentially boosting foreign direct investment (FDI) levels.

Reports have that the FDI might grow by billions of dollars, along with the federal government witnessing a sizable surge in revenue as well. As per Finance Minister Muhammad Aurangzeb, this allocation of excess power will translate into investments and innovation.

Currently, several power plants in Pakistan are operating below capacity, causing them to be a liability. However, since crypto mining and AI data centres consume large amounts of electricity, redirecting excess power could eliminate these liabilities while simultaneously generating revenue.

The US’s shift towards working with Pakistan on virtual asset initiatives seems to have left India isolated on the global digital asset stage.