KARACHI: Pakistan’s adoption of the USD1 stablecoin is set to revolutionise the country’s remittance channel, promising to slash transfer costs and bypass traditional banking delays, a senior banker said.
“Remittances to low- and middle-income countries often carry high fees (often 6-7 per cent on average), which needs to be under the Sustainable Development Goal (SDG) target of 3.0 per cent,” said Group Head at JS Bank Limited Furrukh Zaeem.
“Stablecoins can sharply reduce this [fees] by cutting out correspondent banking layers,” Zaeem said. “For Pakistan, this could translate into major savings for migrant workers and recipients alike.”
Last month, Pakistan signed a memorandum of understanding with SC Financial Technologies, an affiliate of World Liberty Financial, to develop digital payment systems based on blockchain technology. The partnership seeks to modernise Pakistan’s financial infrastructure by implementing secure and compliant digital payment systems alongside the integration of a USD1 stablecoin. This initiative aligns with Pakistan’s ongoing efforts to develop its own digital currency, ‘Digital Rupee’.
In an effort to decrease the use of cash and improve cross-border payments like remittances, Pakistan has been exploring digital currency projects. With an estimated 40 million cryptocurrency users and up to $300 billion in annual trading volumes, the nation sees over $36 billion in remittance inflows each year.
Remittances from Pakistani workers employed abroad increased to $23.2 billion in the first seven months of the fiscal year 2026, up 11 per cent from a year earlier, thanks to continued incentives for official transfers and a narrower gap between formal and informal exchange rates. Analyst consensus maintains that foreign remittances, a crucial lifeline for Pakistan’s economy, are likely to reach around $40-42 billion in FY26, up roughly 7-7.5 per cent from the record approximately $38 billion received in FY25. The State Bank of Pakistan (SBP) forecasts remittances to rise to $41.2 billion in FY26, with further gains expected due to Eid-related inflows.
As part of the ongoing International Monetary Fund (IMF) loan programme, Pakistan has committed to conducting a comprehensive assessment of remittance costs and structural barriers in cross-border payments. Additionally, the country needs to develop an action plan to address these issues, with a target deadline around May of this year. The Ministry of Finance and the SBP are working together to reduce remittance costs and promote the use of formal channels by addressing processing fees, compliance issues, and inefficiencies in correspondent banking.
“Yes — there have been concrete developments related to the government and the SBP managing remittance incentives within a fiscal budget and revising the incentive framework as part of IMF-linked economic adjustments,” Zaeem said. “These changes directly affect how remittance incentives will be administered and how remittance flows behave,” he added.
The SBP has implemented measures, including updates to the remittance rebate and incentive programme, effective July 2025. The minimum eligible remittance amount for receiving a rebate has been increased from $100 to $200, and the rebate has been simplified to a flat SAR 20 per eligible transaction. For the first time, exchange companies (non-bank money transfer entities) have been included in this programme. These changes aim to rationalise incentive costs and reduce the fiscal burden on both the government and the SBP’s budget for remittance incentives.
Pakistan is actively working to integrate Raast, its instant payment system, with the Arab Monetary Fund’s Buna cross-border payment platform. This integration aims to enable real-time credit of remittances from Gulf countries and beyond. The SBP has linked Raast with Buna with the goal of reducing remittance costs and improving the speed of transactions for overseas Pakistanis. Last week, the central bank said the integration of Raast with the Buna platform is nearly complete. This new system will be launched soon. Additionally, the discussions are ongoing with Saudi Arabia and the UAE to integrate Pakistan’s digital payment system with those of the two Gulf Cooperation Council countries.
“JS Bank, as a participating bank in the Raast network, stands to benefit directly from this cross-border connection,” he said. “While SBP leads the platform integration, banks like JS Bank will see transactions automatically settle into customer accounts once upstream links (eg, Buna) are live.”
Zaeem stated that JS Bank has been actively involved in open banking initiatives, having designed its technology stack to support third-party integrations, fintech companies, and developers through API-based services. This approach goes beyond basic online banking, allowing partners to embed banking functions directly within their platforms.
Ibrahim Amin, a financial analyst, emphasises the urgent need for affordable, technology-driven solutions to accelerate remittance transfers for overseas Pakistanis, especially those residing in the GCC region, the United States, and Europe. He expects that the arrangement of a USD1 stablecoin could explore new avenues for secure, cashless cross-border remittance transactions and reduce reliance on informal, cash-based, and unbanked channels. Amin argues that this digital transformation would deliver mutual economic benefits for both sending and receiving countries. He warned that the main challenges of such arrangements would be customer adoption of the new system and common digital risks, including cybersecurity threats and online scams.
Regarding the utility of cryptocurrency, he mentioned that its mechanisms are gradually evolving worldwide; however, it is still too early to predict tangible benefits at this stage. He added that Pakistan’s government has invited international crypto exchanges to obtain no objection certificates, and many of these exchanges have expressed interest in exploring projects in Pakistan, including asset tokenisation initiatives.
