Govt Plans to Turn Eurobond Debt Into Digital Tokens - ProPakistani

Pakistan is considering the use of digital tokenization to manage its existing Eurobond debt, with the government seeking Cabinet approval before moving forward with the proposed initiative.

Finance Minister Muhammad Aurangzeb disclosed the plan on Monday during a dialogue on digital assets and the future of banking organized by the Pakistan Banks’ Association in collaboration with LUMS.

The Ministry of Finance is currently reviewing the proposal, which would involve exploring the tokenization of existing sovereign debt. Aurangzeb said the government is holding discussions on the initiative and expects to obtain Cabinet approval before issuing a request for proposals (RFP).

The proposed initiative would examine how tokenization could be applied to Pakistan’s existing Eurobond liabilities, potentially creating new avenues for digital financial transactions and investment. However, the government has yet to finalize the proposal or begin the RFP process.

Aurangzeb called on banks to contribute to the development of practical proposals involving digital financial technologies, citing their customer relationships, operational experience and risk management capabilities.

He urged financial institutions to invest in the expertise needed to assess emerging technologies and coordinate with regulators on activities permitted under their respective mandates.

Pakistan has established a statutory framework for virtual assets under the Virtual Assets Act 2026, with the Pakistan Virtual Assets Regulatory Authority (PVARA) responsible for licensing and supervising virtual asset service providers.

The State Bank of Pakistan has also introduced a conditional mechanism allowing banks to provide services to PVARA-licensed businesses, subject to due diligence requirements and the segregation of client funds.

However, banks remain prohibited from investing, trading or holding virtual assets using their own funds or customer deposits.

Aurangzeb emphasized that digital financial innovation must be supported by regulatory oversight, appropriate safeguards and cybersecurity measures, warning that the country faces continuous threats from state and non-state actors.

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