Pakistan is exploring blockchain-based payment systems that its virtual assets regulator says could cut the cost of sending money home from abroad and unlock close to $1 billion in additional benefits. The proposal, outlined by Minister of State and Pakistan Virtual Assets Regulatory Authority (PVARA) Chairman Bilal Bin Saqib, includes regulated stablecoins and a pilot for the Gulf remittance corridor, but remains at the stage of study and planning rather than implementation.

According to reports on Tuesday, a joint working group is evaluating digital payment solutions, including a proposed pilot focused on remittances from Gulf countries. Annual remittances to Pakistan are estimated at around $41 billion to $41.6 billion. The “nearly $1 billion” figure appears to come from the arithmetic of cost reductions, since the report says such a reduction could free up roughly $820 million to $1.25 billion. Those amounts correspond to savings of about two to three percentage points on the total, an inference from the numbers rather than a statement quoted in the report. The initiative, the report adds, remains under consideration, and Saqib urged policymakers and financial institutions to make sure Pakistan plays a meaningful role in shaping the next generation of global financial rules.

The idea is not new, and the earlier estimate was more modest. In August, Saqib said Pakistan could save around $400 million a year if regulated stablecoins reduced transaction costs by one percentage point on roughly $40 billion in remittances. He said that about $40 billion still arrives through the “old model,” through the SWIFT system, and cited World Bank data showing that the global average cost of sending $200 is around 6%. That, he argued, leaves room for stablecoins, which are generally digital representations of the US dollar that move over blockchain networks, to lower the cost. He added that the global stablecoin market has exceeded $300 billion and that more than $35 billion in real-world assets have already been moved onto blockchain infrastructure. The $1 billion figure is therefore a larger version of the same argument, resting on the assumption that costs could fall by more than the one percentage point used in the first estimate.

The logic is straightforward. Remittances are one of Pakistan’s most important sources of foreign currency and a lifeline for millions of households. Any fee charged to send that money is a deduction from what the recipient family gets, and a smaller deduction means more money reaching the household. The Gulf corridor is a natural place to start because it carries a significant share of the country’s inflows and a large number of migrant workers use it every month. A system that is faster and cheaper, if it works as described, could also encourage more use of formal channels over informal ones, which would be good for the country’s reserves.

Saqib has also framed the technology as being about more than remittances. He has said blockchain could support payments to Pakistan’s growing community of freelancers and digital workers, as well as cross-border settlement, trade finance, private credit and tokenised financial assets. At the United Nations in September, he called for global rules on digital finance, arguing that governments should shape regulation before technology gets ahead of it, while warning that going too far in the opposite direction could push legitimate activity into less transparent environments. PVARA, which has been developing a licensing framework for virtual asset service providers, has said its approvals for exchanges are a first step under a supervised framework, not blanket permission.

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There is also an international dimension. Business Recorder has reported, citing sources, that World Liberty Financial, the main crypto business of the family of US President Donald Trump, would work with Pakistan’s central bank to integrate its USD1 stablecoin. The details were not available in the material reviewed, and there has been no official confirmation in the reports seen so far.

Several questions will determine whether the plan works. The first is the “last mile.” A remittance sent as a stablecoin has to be converted into rupees and paid out to a recipient, and the fees and exchange rates at that stage can erode some or all of the savings from cheaper transfers. The second is risk. Stablecoins depend on the issuer’s reserves and the regulatory framework around it, and consumers need clear protection if something goes wrong. The third is oversight: anti-money laundering rules, tax treatment and the role of the State Bank of Pakistan in a system that moves outside the traditional banking rails. The reports reviewed do not describe how these issues would be handled, and the pilot has not yet been designed in public.

It is also worth noting how much depends on the assumption. A savings of one percentage point on $40 billion is $400 million, while two or three points gives the larger number, but the cost of sending money from the Gulf is already lower than the global average in many corridors, because of competition among exchange companies and banks. If the starting point is lower than 6%, the room for savings may be smaller than the projections suggest. Independent analysis of existing costs on the Gulf routes would help test the claim.

For now, the proposal is a sign of how seriously Pakistan’s government is taking digital finance, and of its wish to claim a role in shaping new rules. Whether it produces savings for the families who actually send and receive the money will depend on the pilot, the regulation around it and the willingness of banks, exchange companies and overseas workers to use it.

Compiled by the Weekly PK Business Desk.