Pakistan approves Virtual Assets Act to regulate crypto

The Pakistan government has formally approved the Virtual Assets Act, 2025, establishing a comprehensive legal framework to license, supervise, and regulate virtual asset services across the country.

The new law, approved by the federal cabinet, the prime minister, and the president, creates the Pakistan Virtual Asset Regulatory Authority (PVARA), an autonomous federal body empowered to ensure transparency, compliance, financial integrity, and the prevention of illicit activity in the virtual asset sector.

The regulatory architecture has been designed in line with international standards, including those set by the Financial Action Task Force (FATF).

PVARA’s Board will consist of senior government officials, including the central bank governor, secretaries of finance, law and justice, and information technology and telecommunications, as well as the chairpersons of the Securities and Exchange Commission of Pakistan (SECP), the Federal Board of Revenue (FBR), and the Digital Pakistan Authority.

In addition, two independent directors with expertise in virtual assets, law, finance, or technology will be appointed by the federal government. The chairperson of the Authority will be selected based on proven experience in finance, law, technology, or regulatory affairs.

Under the new legislation, all individuals and companies offering virtual asset services in or from Pakistan will be required to obtain a license from the Authority. A structured licensing regime will be introduced, mandating clear requirements for incorporation, operational readiness, compliance systems, and regular reporting. This is aimed at bringing transparency and accountability to a sector that has often operated in legal gray areas.

To foster innovation while maintaining regulatory safeguards, the Act introduces a regulatory sandbox, a controlled environment where new technologies and business models can be tested under the Authority’s supervision. The Authority will also have the power to issue no-action relief letters in specified circumstances, allowing innovators to explore new use cases without immediate regulatory penalties.

The legislation mandates the formation of a Shariah Advisory Committee to ensure compatibility of virtual asset services with Islamic finance principles. All licensed entities offering Shariah-compliant products will be required to adhere to the rulings issued by this Committee.

For legal recourse, the Act establishes a Virtual Assets Appellate Tribunal, which will operate with judicial independence and a specialized bench consisting of legal, financial, and technological experts. The Tribunal will handle appeals against decisions made by the Authority, ensuring procedural fairness and regulatory accountability.

With the passage of this forward-looking legislation, Pakistan becomes one of the few countries in the region to introduce a comprehensive framework for regulating digital and crypto-assets.