Pakistan enacts virtual assets act, launches new regulatory authority

Pakistan has formally enacted the "Virtual Assets Act, 2025," establishing a federal regulatory body to oversee the country's digital asset sector. The move follows approvals from the federal cabinet, Prime Minister Shehbaz Sharif, and President Asif Ali Zardari.

The new law creates the Pakistan Virtual Asset Regulatory Authority (PVARA), an independent body empowered to license, monitor, and supervise virtual asset service providers (VASPs). PVARA will align its work with international norms, including guidelines from the Financial Action Task Force (FATF), to ensure compliance, financial transparency, and the prevention of illicit financial activities.

The Authority’s Board will include top government officials, such as the Governor of the State Bank of Pakistan (SBP), Secretaries of Finance, Law and Justice, and Information Technology, and Chairpersons of the SECP, FBR, and Digital Pakistan Authority. The board will also include two independent directors and a chairperson with expertise in finance, law, technology, or regulation.

Under the new law, any person or firm seeking to offer virtual asset services in or from Pakistan must obtain a license from PVARA. The licensing framework will define requirements for incorporation, operational capacity, compliance, and reporting.

To foster innovation, the legislation allows for a regulatory sandbox, giving startups and emerging tech companies space to test products under supervision. It also provides for no-action relief letters, under specified conditions, to support experimentation while ensuring regulatory accountability.

The Act addresses compatibility with Islamic finance by mandating a Shariah Advisory Committee. This body will guide the Authority on compliance with virtual asset products with Islamic principles. Licensed companies offering Shariah-compliant products must adhere to the Committee’s rulings.

The law also provides for a Virtual Assets Appellate Tribunal, an independent forum for appeals against decisions of the PVARA. The tribunal will include legal, financial, and technological experts and will function with full judicial independence.

Pakistan's digital asset sector has experienced rapid growth, with millions of users engaging in informal trading. Officials say the new law aims to formalize the industry, protect consumers, and position Pakistan as a future hub for blockchain innovation.

“With this forward-looking legislation, Pakistan takes a major step in shaping a secure, inclusive, and innovation-friendly digital financial ecosystem,” a government statement said.