Pakistan passes landmark law to regulate crypto firms

Pakistan has enacted the Virtual Assets Act 2026, establishing a permanent legal foundation for the Pakistan Virtual Assets Regulatory Authority. The move formalises oversight of the country’s growing digital asset sector, which had previously operated under temporary rules introduced in 2025.

Under the new framework, PVARA is responsible for licensing, regulating and supervising virtual assets and virtual asset service providers operating in Pakistan. The law gives the authority powers to issue, suspend and revoke licences, while unlicensed operations can face fines and criminal penalties.

The official text says the law is intended to support investor protection, transparency and market integrity, while giving the regulator a framework to combat money laundering, terrorist financing, proliferation financing and other illicit activity involving virtual assets.

Authorities have also linked the new framework to Pakistan’s wider digital economy agenda. Prime Minister Shehbaz Sharif recently directed that an effective regulatory system for virtual assets should be operationalised in line with international standards to promote the digital economy and enhance investor confidence.

PVARA is working with national institutions as it transitions into an operational regulator, including through a regulatory sandbox and rules requiring prior authorisation for virtual asset pilots, partnerships and implementations involving users in Pakistan.

The legislation comes as Pakistan seeks to attract regulated digital asset activity while tightening oversight of financial crime risks. Officials have also linked virtual asset regulation with broader ambitions in digital finance, AI-powered payments and workforce preparation for emerging technologies.

Why does it matter?

Pakistan’s new law marks a shift from temporary or informal oversight towards a statutory framework for virtual asset regulation. By creating a regulator with licensing, supervision and enforcement powers, the country is seeking to bring crypto-related activity into a more formal compliance environment while addressing risks linked to illicit finance, investor protection and market integrity.

The move also reflects a broader trend in emerging markets, where governments are trying to balance digital asset innovation with stronger financial regulation. Pakistan’s challenge will be to attract credible crypto and blockchain activity without creating regulatory gaps around banking access, consumer protection, cross-border flows and financial crime.

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