CBDC vs Cryptocurrency in Pakistan: A Comparative Review

While the growing, informal adoption of cryptocurrencies exacerbated by Pakistan's inconsistent regulatory stance regarding cryptocurrency adoption and regulation, presents a speculative and volatile threat to the nation's financial stability, a well-designed Central Bank Digital Currency (CBDC) offers a controlled, secure, and regulated path toward financial inclusion, economic formalization, and enhanced monetary policy control. The objective of this analytical review to search the grey literature and Scientific writings to analyze the mix approach of Pakistan toward Digital Finance especially Cryptocurrency and CBDC. This review article examines this ideological struggle, tracing the history of the State Bank of Pakistan's (SBP) and Securities and Exchange Commission of Pakistan's (SECP) cautionary stance on decentralized cryptocurrencies, driven by concerns over financial integrity, money laundering, and consumer protection. It then contrasts this with the government's recent pivot toward a pro-innovation approach, spearheaded by the establishment of the Pakistan Crypto Council (PCC) and the appointment of key advisors. This pivot is a direct response to a burgeoning, informal digital asset market, with millions of Pakistanis already actively using virtual currencies to hedge against inflation and overcome financial access barriers. The article analyzes two parallel policy pathways emerging from this tension: the development of a state-controlled Central Bank Digital Currency (CBDC) and the formalization of the decentralized virtual assets market through the new Virtual Assets Act (VAA) 2025. The research offers a comprehensive understanding of the strategic trade-offs a developing country faces when navigating the complex relationship between financial stability, technological innovation, and economic inclusion, providing a crucial case study for international policymakers.