Regulating Crypto in Pakistan: New Rules, New Challenges

Pakistan has introduced a new law called the Virtual Assets Act 2026, which creates a federal body named PVARA to oversee all virtual asset activities. The legislation was signed into law on March 4, 2026 and became effective the next day. It applies to every part of the country and is meant to bring crypto trading, wallet services, token sales, and other related businesses under a clear regulatory framework. The act aims to replace the informal and sometimes risky environment that previously existed. PVARA is tasked with issuing licenses, inspecting companies, and enforcing rules for anyone dealing in virtual assets. Businesses that want to operate as a VASP must first obtain a No Objection Certificate (NOC) from PVARA, which is the initial step toward a full license. This process requires companies to register for anti‑money laundering (AML) compliance, incorporate in Pakistan, and submit a formal application. Key requirements for firms include strict customer verification, ongoing transaction monitoring, record‑keeping, and reporting suspicious activity. They must also keep customer funds separate from their own money, maintain robust cybersecurity measures, and provide clear disclosures to users. If a company operates without the necessary license, it faces fines of up to 50 million PKR, possible imprisonment, and seizure of assets.On April 14, 2026, the State Bank of Pakistan issued a circular confirming that PVARA is the authority responsible for licensing and supervising virtual asset businesses. Banks are now allowed to open accounts for licensed VASPs, but only after verifying the license and ensuring compliance with AML/CFT rules. Banks must keep client money in separate accounts and are prohibited from using their own or customer funds to invest in virtual assets. The new regulations also cover stablecoins and other tokenized products. PVARA announced on April 26, 2026 that any service involving these assets must receive prior approval. Companies are encouraged to participate in a regulatory sandbox or request no‑action relief letters to test their services under PVARA’s guidance. Overall, Pakistan’s new law seeks to bring transparency and consumer protection to the crypto market while ensuring that businesses operate within a well‑defined legal structure. The challenge for firms will be to navigate the licensing process and comply with rigorous AML and cybersecurity standards.