In a groundbreaking development for international crypto diplomacy Pakistan and El Salvador have signed a landmark agreement to collaborate on Bitcoin adoption and blockchain innovation Finalized on July 16 2025 in San Salvador the partnership marks the first bilateral alliance between two sovereign nations centered entirely around digital assets
A New Era of Biplomacy
The agreement is anchored in a Letter of Intent LoI signed by Bilal Bin Saqib Pakistans Special Assistant to the Prime Minister on Blockchain and Crypto and CEO of the Pakistan Crypto Council and officials from El Salvadors Bitcoin Office under President Nayib Bukele This collaboration signals the start of what both sides are calling Biplomacy a fusion of Bitcoin and diplomacy aimed at advancing financial innovation and strategic alignment through digital currencies
The LoI outlines plans for technical cooperation Bitcoin integration in public sector services policy development suitable for emerging economies and knowledge sharing initiatives designed to foster financial inclusion Both nations hope this agreement will serve as a template for others exploring the potential of cryptocurrency at a national scale
Pakistans Rapid Crypto Advancement
After years of regulatory caution Pakistan has recently embraced the digital asset revolution with notable vigor In May 2025 the country launched the Pakistan Crypto Council PCC to oversee strategic development in the sector This was followed in July by the establishment of the Pakistan Virtual Assets Regulatory Authority PVARA tasked with supervising the countrys growing crypto ecosystem
The government also earmarked 2000 megawatts of surplus energy to support Bitcoin mining and artificial intelligence data centers This surplus capacity will be monetized to generate revenue and attract foreign investment Additionally the government announced the creation of a Strategic Bitcoin Reserve further cementing Bitcoin as a part of its sovereign asset strategy .
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Estimates suggest that 15 to 20 million Pakistanis already hold cryptocurrency and the country boasts over 40 million active users with an annual trading volume exceeding 300 billion dollars These numbers highlight a growing grassroots movement that complements the governments top down efforts
El Salvadors Trailblazing Bitcoin Strategy
El Salvador led by President Bukele has been a global pioneer in Bitcoin adoption In 2021 it became the first nation to recognize Bitcoin as legal tender through its groundbreaking Bitcoin Law While this bold move received criticism from international institutions such as the International Monetary Fund IMF the country continued to build its Bitcoin holdings which now total over 6200 BTC valued at around 750 million dollars
The countrys innovative use of geothermal energy to power Bitcoin mining sourced from its volcanoes has drawn international attention El Salvador also introduced the Chivo wallet and integrated the Lightning Network to facilitate Bitcoin based remittances and reduce transaction costs Although domestic use has been modest the long term infrastructure and financial inclusion goals remain in focus
Even after the IMF pressured El Salvador to repeal Bitcoins legal tender status in early 2025 the country has remained committed to leveraging digital assets as a tool for sovereignty and innovation
Navigating Global Challenges
Both countries face scrutiny from the IMF which has raised concerns over Bitcoins potential to destabilize fiscal systems Pakistans proposed electricity subsidies for mining for example were rejected by the IMF Nevertheless Pakistan secured a 7 billion dollar IMF loan in 2024 committing to strict fiscal oversight through 2027 while continuing to invest in its crypto agenda
El Salvador meanwhile has balanced global skepticism with domestic conviction positioning itself as a test case for how Bitcoin can be used by developing nations to gain financial independence
A Model for the Future
The agreement between Pakistan and El Salvador sets a precedent for international cooperation based on digital currency frameworks Under the new partnership both countries will work on deploying blockchain in areas such as digital identity land records public remittances and transparent finance systems They also plan to co develop regulatory standards aligned with international bodies like the Financial Action Task Force FATF
Pakistan is expected to begin pilot programs through its State Bank while El Salvador continues scaling its mining operations and public crypto infrastructure
Conclusion
This historic partnership signals the maturation of Bitcoin as a diplomatic and economic tool By joining forces Pakistan and El Salvador aim to pioneer a new global standard in sovereign level crypto collaboration As the world watches their experiment could reshape how developing nations integrate digital assets into national policy and international relations .