CRYPTOCURRENCY AND TERROR FINANCING: PAKISTAN’S REGULATORY CHALLENGES IN THE GLOBALISED DIGITAL ECONOMY

This research paper examines how Pakistan can reduce the risks of terrorist financing (TF) linked to virtual assets (VAs) by enhancing data-intensive workflow for pre-existing authorities. Using a qualitative content analysis approach, the study takes statutes, regulator circulars, and institutional analyses and reports as primary sources, triangulated with reputable secondary reporting. The findings highlight three recurring gaps: the absence of a settled licensing and inspection regime for virtual-asset service providers, missing Travel-Rule messaging, and weak evidentiary continuity between alert and arrest. These stratifications are magnified by high grassroots adoption of the VAs and a significant cash usage dependency. Priority recommendations include the designation of a virtual-asset service provider (VASP) supervisor, the creation of a national “Travel-Rule” utility, the creation of rapid-freeze and evidence-continuity protocols, and publishing sector-specific red flags using standardised suspicious transaction report (STR) crypto fields. Taken together, these measures can provide admissible, timely evidence while protecting lawful innovation and strengthening cross-border investigative cooperation capacity.