Pakistan and El Salvador Strengthen Diplomatic Ties With New Crypto Alliance

Key Takeaways:

• Pakistan and El Salvador formalize diplomatic ties with crypto at the center.
• Pakistan plans a national Bitcoin reserve and regulatory body for oversight.
• El Salvador maintains active Bitcoin purchases under an IMF deal.

Pakistan and El Salvador have initiated formal diplomatic ties centered on cryptocurrency cooperation, according to a report published by Bloomberg.

The partnership follows a meeting in San Salvador between Bilal Bin Saqib, special assistant to Pakistan’s prime minister on crypto and blockchain, and El Salvador President Nayib Bukele.

The discussions focused on knowledge-sharing in digital asset infrastructure and policy, while Pakistan plans to structure its crypto markets under regulatory oversight.

Pakistan recently allocated 2,000 megawatts for Bitcoin mining and intends to establish a national Bitcoin reserve. The government previously launched the Pakistan Virtual Assets Regulatory Authority (PVARA) to oversee the domestic digital asset market.

Pakistan creates digital assets regulator PVARA to oversee crypto industry with @cz_binance and @saylor as strategic advisors amid massive 40M users and $300B annual trading volume.#Pakistan #Cryptohttps://t.co/sGm3VPdu1M

Earlier this year, Saqib stated that up to 20 million Pakistanis currently hold crypto, despite ongoing caution from the country’s central bank.

El Salvador adopted Bitcoin as legal tender in 2021 and continues to acquire the asset while under an International Monetary Fund (IMF) agreement. According to government figures, the country holds 6,238 Bitcoins. Tether also opened a headquarters there in January.

Pakistan is currently under a $7 billion IMF program that runs through 2027. The fund has expressed concerns about state-level digital asset purchases, but El Salvador has continued its policy regardless of the terms.

“Bitcoin keeps being an important project,” said El Salvador’s economy minister, Maria Luisa Hayem, when the government purchased seven Bitcoins despite the agreement with the IMF. “There is an asset accumulation that we’re seeing from the government perspective, from the private sector perspective.”

By forming bilateral channels focused on infrastructure and governance, countries under IMF influence may seek greater autonomy in structuring digital asset policies without triggering compliance issues or threatening macroeconomic stability.

Other emerging economies with large unbanked populations are also exploring sovereign digital asset programs, seeking to reduce reliance on foreign exchange reserves and expand financial access without altering core monetary frameworks.

While not disclosed in current statements, both countries are actively investing in Bitcoin mining. Future collaboration could include technology transfer, operational partnerships, or coordinated infrastructure planning if aligned under bilateral frameworks.

Most IMF-supported nations have either restricted or delayed digital asset integration. Pakistan’s move to create a national reserve and regulatory authority places it ahead in formal crypto adoption among peers under similar fiscal supervision.

Potential obstacles include central bank resistance, volatility management, custodial infrastructure, and compliance with existing IMF conditions. Legal clarity on asset classification and secure storage mechanisms will also be essential.

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