Pakistan enacts virtual assets act to regulate digital assets

The Government of Pakistan has formally enacted the Virtual Assets Act, 2025, establishing a regulatory framework for digital assets and introducing a dedicated authority to oversee their compliance with both international standards and Islamic finance principles.

The law establishes the "Pakistan Virtual Asset Regulatory Authority (PVARA)," an autonomous federal body empowered to license, regulate, and supervise all virtual asset service providers operating within or from Pakistan. The move follows approvals by the federal cabinet, Prime Minister Shehbaz Sharif, and President Asif Ali Zardari, according to a press release from the office of the special assistant to the prime minister on blockchain and crypto.

PVARA will be responsible for ensuring transparency, financial integrity, and the prevention of illicit activity in the digital asset space. It will align its operations with international standards, including those set by the Financial Action Task Force (FATF).

The authority’s board will include senior government officials such as the Governor of the State Bank of Pakistan, secretaries from the ministries of finance, law, IT and telecommunications, and heads of the Securities and Exchange Commission of Pakistan (SECP), Federal Board of Revenue (FBR), and Digital Pakistan Authority. Two independent directors with relevant expertise will also be appointed by the federal government, while the Chairperson will be selected based on experience in finance, law, technology, or regulatory affairs.

All individuals or firms wishing to offer virtual asset services in Pakistan will be required to obtain a license from PVARA. The licensing regime will include requirements for corporate incorporation, operational readiness, compliance systems, and reporting standards.

To foster innovation, the act introduces a regulatory sandbox, enabling companies to test emerging technologies and business models under supervisory oversight. The authority may also issue "no-action relief letters" under certain conditions to support experimentation without compromising regulatory obligations.

In line with Pakistan’s Islamic finance goals, the legislation mandates the formation of a Shariah advisory committee to guide the Authority on the compliance of virtual asset products and services with Islamic principles. Entities offering Islamic financial products will be required to adhere to the committee’s rulings.

An independent virtual assets appellate tribunal will also be set up to hear appeals against PVARA’s regulatory decisions. The tribunal will comprise experts in law, finance, and technology, ensuring specialized oversight of disputes in the sector.

The enactment of the law marks a significant step in Pakistan’s efforts to build a secure and inclusive digital financial ecosystem, positioning the country for future advancements in fintech and blockchain innovation.