Introducing Biplomacy Through Bitcoin
The recent agreement between Pakistan and El Salvador regarding Bitcoin highlights how cryptocurrency can help emerging economies navigate traditional financial oversight. This arrangement marks a shift from conventional diplomatic practices and introduces the concept of “Biplomacy,” where Bitcoin advocacy shapes international relations. The encounter between El Salvador’s President Nayib Bukele and Pakistan’s special assistant on cryptocurrency, Bilal Bin Saqib, is a landmark diplomatic step, establishing a collaborative framework for knowledge exchange on Bitcoin initiatives that carry broader implications.
Learning from El Salvador’s Bitcoin Office
El Salvador’s Bitcoin Office is poised to serve as a model for Pakistan as it explores cryptocurrency management and state-level digital asset strategies. The formal partnership between the Bitcoin Office and the Pakistan Crypto Council will pave the way for bilateral collaboration in areas such as public sector adoption and blockchain-driven financial inclusion. Under the agreement, Pakistan aims to send technical delegations to El Salvador to evaluate pilot projects utilizing blockchain for government payments and to study El Salvador’s regulatory and tax frameworks surrounding Bitcoin.
Shifting Stances on Cryptocurrency
Pakistan’s recent embrace of cryptocurrency signifies a notable change from its previous stance. In 2018, the State Bank of Pakistan ruled digital currencies as illegal tender and prohibited cryptocurrency transactions. However, following a policy shift, Pakistan established the Pakistan Virtual Assets Regulatory Authority in July this year. This move, along with the creation of the Pakistan Crypto Council, demonstrates significant political commitment to adopting cryptocurrency, as almost 20 million citizens now hold digital assets worth approximately $20-25 billion.
High-Profile Collaborations Amplifying Intent
In a sign of serious commitment, Bilal Bin Saqib and other high-profile figures, including Pakistan’s Finance Minister and Bitcoin advocate Michael Saylor, discussed how crypto could bolster Pakistan’s financial resilience. The involvement of external stakeholders underlines the complex ecosystem influencing these initiatives. However, partnerships with private entities raise concerns about governance and orientation, risking conflicts of interest and skewing development priorities.
Geopolitical Implications of Bitcoin Adoption
Pakistan’s engagement with President Donald Trump’s affiliations through the Trump family’s World Liberty Financial suggests strategic positioning to solidify ties with the U.S. This agreement appears to underline the growing influence of alternative financial frameworks while also raising flags around potential conflicts of interest, especially given the Trump family’s connections to high-ranking Pakistani officials. Both nations, currently involved with IMF programs, are pursuing cryptocurrency strategies that diverge from standard IMF guidance, highlighting a trend toward financial independence from traditional institutions.
Future of Financial Sovereignty and Risks
The cooperation between Pakistan and El Salvador signals a potential shift toward alternative financial structures, reflecting broader geopolitical trends emphasizing multipolarity and diminishing Western dominance in financial governance. Yet, these moves could undermine global governance frameworks, as both countries grapple with issues like corruption and illicit finance. While El Salvador has faced challenges in effectively regulating cryptocurrency flows, Pakistan’s governance issues add complexity to its aspirations for crypto integration.
Challenges Ahead for Implementation
Though El Salvador’s recognition of Bitcoin as legal tender positions it as a potential model for emerging economies, the efficacy of this partnership remains uncertain. Both nations will likely face hurdles such as limited institutional capacities and regulatory challenges that might hinder successful cryptocurrency adoption, questioning whether they can effectively leverage this new financial tool.
