Pakistan has joined the growing list of countries considering making Bitcoin a strategic asset. Inspired by the United States, El Salvador, and Bhutan, the country plans to build a national reserve in BTC, while exploring the idea of using DeFi to generate returns.
Pakistan is ready to adopt Bitcoin, following the example of Bhutan and the United States
Over the past year, the idea of building strategic reserves in Bitcoin at the state level has been gaining traction. El Salvador led the way in 2021, followed this year by the United States, which is considering using BTC seized by the courts to create a national reserve. Bhutan, more discreetly, has accumulated Bitcoin from mining powered by its hydroelectric surpluses, now holding the equivalent of 40% of its GDP in BTC.
Even in India, the BJP spokesperson recently called for a similar initiative. Today, Pakistan appears to be preparing to adopt Bitcoin. Earlier this year, the country appointed Changpeng Zhao, former CEO of Binance, as an advisor on cryptocurrencies.
Later, Bilal Bin Saqib, the minister in charge of crypto, announced his intention to create a strategic reserve of Bitcoins at the Bitcoin conference in Las Vegas.
This week, Cointelegraph revealed that Pakistan was preparing to adopt Bitcoin, taking inspiration from the US and Bhutanese models.
It seems that CZ’s advice has helped Pakistan define a clearer Bitcoin adoption strategy.
According to Cointelegraph, the country plans to build a strategic reserve of BTC, inspired by the US model, using bitcoins confiscated by the courts.
Rather than selling them, Pakistan plans to hold onto them and place them in decentralized finance (DeFi) protocols to generate returns while remaining budget neutral. Islamabad, the country’s capital, plans to allocate 2,000 megawatts of surplus electricity to Bitcoin mining and artificial intelligence infrastructure. This initiative will enable the country to increase the profitability of its power plants while accumulating BTC for its reserve.
Is the risk of DeFi worth it for Pakistan?
While mining and holding Bitcoin is a coherent strategy for a government, using it in DeFi protocols is a whole other ball game.
While the lure of profit may encourage risk-taking, it’s important to remember that DeFi protocols remain vulnerable to technical flaws, bugs, and hacks, even among the most reputable ones. Bybit learned this the hard way earlier this year, losing $1.4 billion following a hack targeting Safe, the multisignature protocol the company was using.
Next, in order to integrate BTC into DeFi, which is mostly based on Ethereum or similar smart contract blockchains, Bitcoins must be converted into tokenized versions (such as Wrapped BTC) through centralized intermediaries. This process introduces counterparty risk: if the entity holding the original BTC goes bankrupt or is compromised, the BTC is lost.
Furthermore, the high returns promised by some protocols often mask low liquidity, fragile economic mechanisms, or even disguised Ponzi schemes. For a government, exposing sovereign funds to this level of instability could prove politically and economically disastrous.
