Pakistan’s crypto obsession has opened floodgates for scams and fraud: Can its ripple effects reach India?

Pakistan’s crypto gold rush has spun out of control, with the country becoming a playground for scam artists while regulators scramble to keep up. Despite being ranked third globally in crypto adoption, Pakistan lacks the trust infrastructure, legal framework, and enforcement mechanisms needed to protect investors.

Victims abound, from professionals losing life savings to influencers unintentionally lending credibility to blatant frauds. In a nation already facing economic turbulence, the crypto chaos exposes not just financial risk but deep structural weaknesses in governance and accountability.

Crypto craze, regulatory vacuum

Pakistan’s fascination with digital assets is well documented. Yet the promise of financial freedom comes at a cost. Talha, a data scientist, recounted losing access to his crypto wallet after storing his 12-word seed phrase on Facebook Messenger. “There was no login attempt, no alert. The funds just vanished,” Dawn quoted him as saying.

He illustrated how “the first time, they let you win small. Then they trap you when you scale up.”

Efforts to report fraud also end up mired in corruption and bureaucratic inertia. Muneeb, who runs a Facebook page called Pakistan iFrauds, shared that after being scammed he “had a case filed against me by authorities,” and “I had to pay a bribe of Rs700,000 just to close the case.”

Unchecked adoption meets weak oversight

With 250-plus crypto apps active in the market and platforms like Binance downloaded millions of times in Pakistan, the ecosystem is massive yet perilous.

Despite this scale, the country’s regulatory framework remains nascent and under-resourced. As fintech expert Zeeshan Ahmed observed, “Pakistan’s crypto ecosystem lacks one key element: trust infrastructure.”

Although the Pakistan Crypto Council (PCC) and the Virtual Assets Ordinance (VAO) have been launched, most of the regulatory sections “still read ‘launching soon.’”

Consequences for investors and for Pakistan

The broken link between investor enthusiasm and institutional safeguards has real human costs. Scams are rife. People are losing money, facing lawsuits, or getting caught in the grey zone where fraud and official negligence overlap. One doctor from Sindh lost nearly Rs1 million after following a podcast that failed to disclose sponsorship.

Pakistan’s regulators warned in 2018 that virtual assets “are neither recognised as legal tender nor authorised by SBP for issuance, sale, purchase, exchange, or investment.”

Yet adoption surged. Today the gulf between the law and reality is egregious.

Should India be concerned?

For India, Pakistan’s crypto free-for-all is more than a financial blunder; it points to institutional fragility. A state unable to implement effective governance measures in one domain is likely to struggle in others -- from border security to counter-terrorism. The Pakistani government’s inability to protect its citizens in the digital domain could mirror its performance elsewhere.

If Islamabad cannot regulate its markets, how can it effectively control militant networks, money-laundering channels, or cross-border trafficking? India’s strategic interests demand scrutiny of every facet of Pakistan’s state capacity -- and Pakistan’s crypto crisis offers an alarming window into systemic weakness.