Virtual Assets and Crypto-currency
Pakistan
Jurisdictional Questions
Contributor:
Question 1: How is blockchain, virtual assets, and cypto-currency regulated in Pakistan? (e.g., by State Bank of Pakistan “SBP” or Securities and Exchange Commission of Pakistan “SECP”)?
Pakistan has enacted on 4th March 2026, the Virtual Assets Act, 2026 (“Virtual Assets Act”) which provides for the establishment of the Pakistan Virtual Asset Regulatory Authority (the “PVARA”) as per Section 6 of the Virtual Assets Act.
Pursuant to Section 9 of the Virtual Assets Act, the functions of PVARA include the following:
(i) the licensing, regulation, and supervision of virtual asset service providers and issuers;
(ii) the protection of customers and investors and the Integrity of Pakistan's Virtual Asset markets by establishing and enforcing appropriate safeguards and conduct of business requirements, prudential, operational-resilience, risk-management standards, and measures to prevent money laundering, terrorist financing and other illicit use of Virtual Assets;
(iii) attract investment and encourage companies operating in the fields of Virtual Assets to base their business in Pakistan;
(iv) promote responsible innovation, digital financial inclusion and the development of compliant Virtual Asset markets within a framework that manages risks and supports financial stability and market integrity;
(v) promote, develop, govern, and regulate the adoption, deployment, and scalable use of blockchain technology and distributed ledger technology across Pakistan;
(vi) assess, determine, and classify any Virtual Asset, service, activity, offering, Issuer, or service provider based on its substantive features, underlying function, method of use, or economic effect, irrespective of the nomenclature, structure, or designation assigned to it. Such classification may include, but is not limited to the determination of whether an asset is a Virtual Asset, whether a Person qualifies as a Virtual Asset Service Provider, or whether an offering constitutes a financial activity within the scope of this Act subject to consultation with the State Bank of Pakistan or the Securities and Exchange Commission of Pakistan where the asset exhibits characteristics falling within their respective mandates;
(vii) coordinate with the Financial Monitoring Unit, National AML and CFT Authority, other relevant authorities and law enforcement agencies to combat money laundering, terrorist financing, and other illicit activities associated with Virtual Assets, in accordance with the Anti-Money Laundering Act, 2010 (VII of 2010), other applicable laws, and international standards;
(viii) advise the Federal Government, on its own motion or upon request, on regulatory, supervisory, technical or emerging risk matters relating to Virtual Assets, digital-asset markets, tokenisation, stablecoin structures, blockchain, DLT, cyber-risks or any matter connected with its mandate under this Act; and
(ix) do all such acts as may be necessary or incidental to the discharge of its functions and to achieve its objectives under this Act and other applicable laws.
Therefore, it appears that pursuant to Section 9(i) of the Virtual Assets Act, the powers to regulate blockchain, virtual assets, and crypto-currency lies with PVARA.
Question 2: What is the official legislative and regulatory stance regarding virtual asset service providers (“VASPs”) and public interaction with cryptocurrencies under SBP circulars?
The regulatory landscape surrounding virtual assets and VASPs in Pakistan has undergone a transition, shifting from a total prohibition to a formal regulation by way of a statutory framework with the enactment of the Virtual Assets Act.
The State Bank of Pakistan (SBP) updated its regulatory posture most notably through a circular dated 14 April 2026, bearing reference no. BPRD Circular Letter No. 10 of 2026 (https://archive.sbp.org.pk/bprd/2026/CL10.htm) replacing its earlier blanket restriction BPRD Circular No. 03 of 2018) with a supervised, phased integration framework.
Question 3 Have any circulars or notifications contributed to virtual asset activities or crypto assets in Pakistan?
Notable contribution for boost in virtual asset activities is predicated on the aforementioned circular bearing reference BPRD Circular Letter No. 10 of 2026 which stipulates that subject to strict compliance with the conditions outlined therein, SBP Regulated Entities (“REs") may open bank accounts of entities duly licensed by PVARA as VASPs:
a) Prior to onboarding a VASP or initiating any activity with it, REs shall obtain and retain, on record, a copy of the VASP’s valid license issued by PVARA and independently verify its authenticity from PVARA.
b) REs shall open separate transactional accounts i.e. Client Money Accounts (“CMAs”) for settlement of authorised transactions of licensed VASPs, where applicable, based on VASP’s business model to deliver permissible services to their clients. Strict segregation between CMAs and other types of accounts of VASPs shall be ensured and commingling of VASP funds with those of their clients shall be strictly prohibited.
c) CMAs shall be Pakistan Rupee denominated, non-remunerative accounts for the purpose of executing authorised transactions of licensed VASPs. Further, cash deposits and cash withdrawals shall not be permitted in CMAs. Moreover, funds maintained in CMAs shall not be used as collateral or security to provide any form of financing or credit facilities to VASPs.
In addition to the Customer Due Diligence (CDD) requirements under Regulation-2 of the Anti-Money Laundering, Combating the Financing of Terrorism & Countering Proliferation Financing (AML/CFT/CPF) Regulations for SBP’s REs, REs must ensure the following:
a) REs shall conduct complete due diligence of the VASPs and gather sufficient information about the VASPs to understand the nature and scope of its business, specific activities it conducts, customer onboarding process, customer base, and the geographic markets in which it operates.
b) REs shall make appropriate amendments to their Customer Risk Profiling (“CRP”) model to account for risks posed by VASPs. Using the amended CRP model, the REs shall appropriately risk-rate the VASPs and ensure that risk-based controls and monitoring mechanisms are effectively implemented.
c) REs shall monitor its relationship with VASPs on an ongoing basis and report any suspicious transaction to Financial Monitoring Unit as per the requirements of Anti-Money Laundering Act, 2010.
d) REs shall ensure compliance with all the relevant laws and regulations including but not limited to Anti-Money Laundering Act, 2010 and SBP’s AML/CFT/CPF Regulations.
5. Banks may also open limited-purpose accounts of entities holding NOCs issued by PVARA enabling them to complete formalities for obtaining a license from PVARA. Only upon the grant of a license by PVARA, the bank can extend additional services (including virtual assets-related transactional activity) subject to strict compliance with the instructions as outlined above.
6. REs shall not invest, trade or hold virtual assets using their own funds or customer deposits.
7. REs shall remain responsible for compliance with all applicable SBP regulations including foreign exchange regulations and any arrangement with a VASP shall not absolve them of such responsibility.
Question 4: How are digital assets, virtual currencies, and utility tokens defined under Pakistani statutory law (e.g., legal tender, movable property, actionable claims, securities, or commodities)?
Pursuant to the Virtual Assets Act, a “Virtual Asset” means a “digital representation of value that can be digitally traded or transferred and used for payment or investment purposes, but does not include digital representations of fiat currency, securities or other financial assets regulated under any other law except where represented, issued, or transferred using distributed ledger technology. For the avoidance of doubt, Virtual Assets are not legal tender”.
Moreover, “Official or Fiat Currency” means as per the Virtual Assets Act “a currency issued by the central bank or monetary authority of a country that is recognized as legal tender under the laws of that country”.
A “Fiat-Referenced Token” is defined in the Virtual Assets Act as “a Virtual Asset that purports to maintain a stable value relative to a single Official Currency of any country and is redeemable at par value by its Issuer”
Furthermore, an “Issuer” means as per the Virtual Assets Act “the legal Person that originates or creates a Virtual Asset and retains primary control over its initial supply, reserve assets (if any) or on-chain governance, and may distribute such Virtual Asset as part of its initial offering, and that bears the ongoing obligations as prescribed by PVARA.” It is further clarified that a Person is not an Issuer solely because it markets, advertises, promotes, facilitates secondary-Market trading (including third-party brokerage, distribution or exchange), or provides technical development or maintenance services without control over issuance, supply or reserve assets.
Moreover, a “Person” means as per the Virtual Assets Act, “a natural or legal Person”.
Furthermore, a “Non-Fungible Token” or “NFT” is defined in the Virtual Assets Act as “a unique, non-interchangeable digital representation of value or rights recorded on a distributed ledger or similar technology, where each token is distinguishable from every other token”.
Question 5: Are there any ongoing obligations on the licensees under the applicable virtual assets law of Pakistan?
Pursuant to Section 22 of the Virtual Assets Act, a Licensee shall, at all times:
(a) maintain the prescribed minimum paid-up capital and financial resources;
(b) comply with the Virtual Assets Act and all Rules, Regulations, directives and guidelines issued by PVARA;
(c) submit such periodic returns, reports and audited financial statements as may be prescribed;
(d) obtain the prior approval of PVARA for any material change in control or business, in the manner prescribed;
(e) maintain risk-management, compliance and cybersecurity systems in accordance with applicable legal and regulatory requirements including adherence to data privacy standards; and
(f) pay such supervision, renewal or other fees as may be prescribed.
Submission date: 2 October 2026
Ashraf Law Chambers is a premier full-service law firm in Pakistan specializing in virtual assets, digital finance, and fintech laws. The firm advises clients on cryptocurrency laws, Web3 projects, token issuance structures, and smart contract legal auditing.
Led by Sheheryar Ashraf, the firm combines multi-jurisdictional legal expertise on emerging technologies, delivering strategic legal solutions for institutional investors, Web3 startups, and digital financial institutions. Sheheryar has has vast experience of advising VASPs, security trustees, export-import banks and magic circle law firms. He also has contributed articles to multiple legal directories.
Sheheryar Ashraf
