Abstract:
This report explains the transformative influence of cryptocurrencies on the traditional banking sector, keeping in view Pakistan. Cryptocurrencies, by their characteristics of decentralization, transparency, and efficiency, challenge traditional banking models by providing peer-to-peer transactions, reduced costs, and enhanced security. This change forces commercial banks to change their operational strategies and embrace the emerging technologies while managing the complexity of regulations. The study highlights the dual nature of cryptocurrency as a threat and an opportunity to traditional banks. The key impact areas are competition, dynamics of regulation, technological adaptation, and customer behavior. For instance, case studies from Pakistan, such as the evolution of the regulatory framework of the State Bank of Pakistan and advocacy by Waqar Zaka, reflect the growing influence of cryptocurrencies in the local context. The report also includes analysis on technological challenges, cybersecurity threats, and financial inclusion with the implementation of blockchain. It provides recommendations for Pakistani banks to avail the infrastructure, develop their technology, be complaint with regulatory bodies, and create awareness in the consumer for digital assets. Innovation, with effective risk management, will make banks an efficient leader in this changing world of finance while providing economic modernization and inclusive development of Pakistan.
