Pakistan is stepping into a transformative phase in digital finance as the conversation around stablecoins gains momentum. The recent news of Sadapay’s stablecoin venture, Zar, raising $12.9 million in seed funding has sparked industry discussions on both the opportunities and regulatory challenges associated with this new frontier. This funding follows Zar’s earlier $7 million pre-seed round, both led by the globally recognized venture capital firm Andreessen Horowitz (a16z), highlighting the growing investor confidence in Pakistan’s fintech ecosystem.
Zar aims to leverage stablecoins to expand access to capital inflows, primarily remittances, tapping into a market that has historically faced inefficiencies and higher transaction costs. Investors such as Coinbase Ventures, Endeavour Catalyst, and VanEck have joined the seed round, underscoring global interest in Pakistan’s digital finance potential. VanEck’s earlier commentary on diminishing trust in local currency has raised questions about the balance between commercial gains and national economic interests.
Experts caution that while stablecoins present significant benefits for financial inclusion, they also carry risks to monetary stability if left unregulated. Muhammad Faran, Associate Director Equity Research at KTrade, points out that significant stablecoin adoption can impact traditional banking operations and currency stability, echoing global concerns highlighted by central banks such as the Bank of England. Stablecoins’ pegged structure and centralized nature can create friction between commercial incentives and national financial priorities, necessitating careful oversight.
Policy experts like Aatiqa Lateef, formerly Director of Policy at Rain in the Middle East, argue that stablecoins warrant bespoke regulation rather than outright prohibition. Regulatory frameworks should prioritize licensing, daily reserve reporting, asset segregation, redemption guarantees, and phased caps on issuance. Proper oversight can ensure transparency and convertibility while mitigating risks like dollarisation, liquidity diversion, and unhedged foreign exchange exposure.
Zar’s internal strategy reinforces this cautious approach. According to sources, the venture primarily targets savings and remittance management rather than facilitating local transactions in dollars. While technical capability exists for local spending through US-issued Zar Visa cards, the focus remains on secure dollar storage and cross-border remittance efficiency. With a waitlist of over 200,000 users in 100+ countries, Zar’s initial rollout emphasizes Pakistan, signaling a careful, phased adoption strategy.
Experts note that a parallel regulatory path is the development of domestic, rupee-backed digital currencies with on/off ramps settled locally through the State Bank of Pakistan. Such measures would preserve the central bank’s visibility, maintain monetary control, and allow commercial innovation within supervised parameters. This framework could also enable banks to act as custodians or issuers of tokenized deposits, ensuring that stablecoin adoption does not undermine domestic banking liquidity or macroeconomic stability.
The broader question for Pakistan remains how to balance commercial freedom and national financial security. As Ms. Lateef highlights, innovation should advance financial inclusion, transparency, and efficiency while staying auditable, reversible, and aligned with central bank oversight. Regulatory clarity will be crucial in enabling ventures like Zar to flourish without compromising currency stability, consumer protection, or monetary policy effectiveness.
Pakistan’s journey toward a stablecoin-enabled financial ecosystem is in its early stages, but the careful calibration of policy, oversight, and commercial innovation could set a blueprint for integrating digital assets safely into the national economy.
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