Whalesbook
Crypto as Pakistan's New Foreign Policy Tool
Pakistan is shifting its foreign policy by using digital assets to build global influence. High-level meetings between World Liberty Financial (WLF) executives and Pakistan's leaders highlight this move, aiming to leverage global tech trends for diplomatic and economic gains.
Pakistan's Crypto Diplomacy Drive
In January, Pakistan hosted Zachary Witkoff, CEO of World Liberty Financial (WLF), a crypto platform co-founded by members of the Trump family. The meeting included Prime Minister Shehbaz Sharif and Army Chief Field Marshal Asim Munir, suggesting more than just a business deal. WLF's involvement, along with its USD1 stablecoin, supports Pakistan's plan to use virtual assets and blockchain in its economy and foreign policy. Bilal Bin Saqib, now Chairman of the Pakistan Virtual Assets Regulatory Authority (PVARA), calls this approach "biplomacy." This has led to partnerships with crypto figures like Changpeng Zhao and has coincided with Pakistan's growing role mediating between the US and Iran amid Middle East conflict. Pakistan is conveying a US 15-point proposal to Tehran, a move seen as a diplomatic success, especially as global energy markets are threatened by tensions.
Leveraging Trump Family Ties
Pakistan's work with World Liberty Financial, which has strong links to the Trump family, appears to be a deliberate effort to gain favor with influential figures in US policy circles. This strategy, sometimes called the "Witkoff Factor," uses business ties connected to the Trump administration to boost Pakistan's diplomatic standing. Reports suggest this has helped Pakistan secure benefits, like lower US tariffs on its goods, and has positioned it to mediate US-Iran issues. Army Chief Asim Munir has overseen significant deals involving cryptocurrency and critical minerals with entities connected to the Trump family. This reflects Pakistan's aim to broaden its international partnerships beyond traditional alliances and signal its relevance in a changing world.
Major Risks Ahead
Economic Fragility: Pakistan's push into crypto diplomacy and digital asset regulation comes as the country faces deep economic challenges. It struggles with high debt, a limited tax base, and persistent inflation, requiring continuous support from the IMF. While a staff-level agreement for a $1.2 billion IMF loan was reached in March 2026, Pakistan's economy remains vulnerable. GDP growth is projected to be slow, barely matching population growth, hindering poverty reduction and job creation. High debt servicing costs and inefficient state companies also strain the nation's finances.
Regulatory and Market Uncertainty: The quick adoption of cryptocurrency brings inherent volatility and regulatory questions. Pakistan's ambition to become a crypto hub, including plans for a national crypto reserve and dedicated energy for mining, exposes it to global market swings. The IMF, which has voiced concerns about countries experimenting with crypto, may be cautious about these initiatives, potentially affecting future aid. The stability of World Liberty Financial itself, as a private company relying on political connections, faces scrutiny and potential regulatory changes in the US.
Geopolitical Volatility: The strategy heavily depends on personal relationships and the current US administration's approach, creating significant geopolitical risk. Any shift in US policy or leadership could greatly affect Pakistan's influence. The success of its US-Iran mediation efforts also relies on external factors and the willingness of both nations to engage, a situation known for its instability. Pakistan's intermediary role, while currently helpful, could become a burden if diplomatic efforts fail or regional conflicts worsen.
World Liberty Financial's Business Model: WLF's business is closely tied to the Trump family's brand and political influence. While it aims to connect traditional finance with decentralized finance, its limited access for US accredited investors and the significant revenue share going to Trump-linked entities raise questions about its long-term growth and potential regulatory issues. As a private company, WLF lacks traditional financial data like P/E ratios or market capitalization, making independent valuation difficult.
The Road Ahead
Pakistan's move into crypto diplomacy is a high-stakes strategy. The country is trying to use digital trends and personal ties to overcome economic and diplomatic hurdles. While it has seen initial gains in influence and mediation opportunities, its long-term success depends on navigating crypto market volatility, managing its economic weaknesses, and dealing with unpredictable global alliances. Whether this unconventional approach leads to lasting economic progress or proves to be a fragile arrangement on shaky ground remains to be seen.