Stablecoins and the Rupee: How Digital Dollars Behaved During Pakistan's 2022–23 Currency Crisis
Rahul Kumar
28/09/2026
The Pakistani rupee lost more than 40 percent of its value against the US dollar between 2022 and 2023, falling from roughly PKR 178 to over PKR 300 per dollar during a balance-of-payments crisis that left the formal banking system short of dollars (State Bank of Pakistan, 2023). That crisis lined up with a real jump in Pakistan's stablecoin use: dollar-pegged tokens gave households and businesses a low-friction way to hold dollar value outside a banking system that still excludes more than 100 million adults (Global Findex, 2022). This paper looks at how stablecoin markets actually behave during episodes like that one. Using Venezuela and India as comparison cases, it shows that liquidity access, not currency sentiment on its own, drives the stablecoin “premium,” the extra local currency people pay above the official rate to buy a token like USDT. Splitting that premium into a structural baseline that exists even without any stress, plus a stress increment that moves with crises and regulatory shocks, helps explain something odd about Pakistan's own numbers. The rupee has barely moved in the past year (about −1.6 percent against the dollar as of August 2026, per Forex.pk), yet crypto adoption has stayed high. The likelier explanation is that adoption is tracking expected depreciation, shaped by the memory of 2022–23, rather than what the currency is doing right now. Stablecoins aren't risk-free either. Reserve quality, issuer credibility, and the fact that ordinary holders can't redeem directly with the issuer all mean a stablecoin trades one kind of risk for another rather than removing it. Running that logic over Pakistan's two live instruments, the USD1 settlement token and a proposed rupee-linked stablecoin, the strongest case for stablecoins here turns out to be remittances. Even so, the saving looks less like a fee cut for senders and more like relief for a subsidy the state is already paying, since Pakistan's remittance corridors already beat the global average. The paper closes with what regulators would need to get right to capture those gains without recreating the liquidity squeezes seen elsewhere in South Asia.