By Hafiz Rahat Usama 
In a significant development for the digital finance landscape, Pakistan and Malaysia have initiated discussions to explore collaborative opportunities in blockchain technology, digital assets, and Shariah-compliant finance. This strategic dialogue aims to forge a robust digital finance partnership that aligns with the Financial Action Task Force (FATF) standards and serves as a model for the broader Organisation of Islamic Cooperation (OIC).
A Meeting of Minds: Bilateral Engagement
The pivotal meeting took place between Malaysia’s Foreign Minister Mohamad Bin Haji Hasan and Bilal Bin Saqib, CEO of the Pakistan Crypto Council (PCC). The discussions centered on leveraging Malaysia’s leadership in Islamic finance and Pakistan’s momentum in crypto regulation to create a synergistic framework for digital financial services. The focus was on co-developing regulatory frameworks that are compliant with international standards and tailored to the unique needs of Islamic finance.
Malaysia’s Vision for Digital Finance
Malaysia has been at the forefront of digital finance innovation, as evidenced by its Financial Sector Blueprint 2022–2026. This blueprint outlines strategic initiatives to advance the digitalization of the financial sector, enhance financial inclusion, and position Malaysia as a leader in value-based Islamic finance. The blueprint emphasizes the importance of integrating emerging technologies such as artificial intelligence and machine learning to improve supervisory functions and foster innovation in financial products and services .The Edge Malaysia+1MIDA+1
Pakistan’s Digital Finance Landscape
Pakistan has made significant strides in digital finance, with initiatives like the Raast instant payment system, which facilitates real-time settlement of retail payments and enhances financial inclusion. The State Bank of Pakistan has also been proactive in drafting open banking regulations and establishing a regulatory sandbox to encourage innovation and competition in the financial sector .
Blockchain-Based Remittance Services: A Success Story
A notable example of Pakistan-Malaysia collaboration in digital finance is the launch of the first blockchain-based cross-border remittance service between the two countries. In partnership with Valyou of Malaysia, Telenor Microfinance Bank introduced this service, powered by Alipay’s blockchain technology. The platform enables secure, transparent, and near-instantaneous money transfers from Malaysia to Pakistan, significantly improving the efficiency of remittances and contributing to financial inclusion .
Looking Ahead: A Digital Finance Partnership
The ongoing discussions between Pakistan and Malaysia represent a forward-looking approach to digital finance collaboration. By combining Malaysia’s expertise in Islamic finance with Pakistan’s advancements in digital payment systems, the two countries aim to create a comprehensive and inclusive digital financial ecosystem. This partnership has the potential to set new benchmarks for digital finance in the Islamic world, promoting economic growth, financial inclusion, and technological innovation.
Conclusion
The dialogue between Pakistan and Malaysia marks a significant step toward a strategic digital finance partnership. By aligning their strengths and resources, both nations are poised to lead the way in developing innovative, Shariah-compliant digital financial solutions that meet international standards. This collaboration not only enhances bilateral relations but also sets a precedent for future cooperation in the digital finance sector within the OIC.