Published: Sep 28, 2026
KARACHI, September 28, 2026: Pakistan's crypto market is beginning to move into the country's formal financial sector, with Pakistan Stock Exchange-listed Trust Securities & Brokerage Limited seeking licences under the country's new virtual-asset regulatory framework.
TSBL said that its board had approved applications to the Pakistan Virtual Assets Regulatory Authority for licences covering custody, exchange, and virtual-asset transfer and settlement services. The brokerage said it has not started providing regulated virtual-asset services and will not do so until the required approvals and licences are obtained.
The development comes as Pakistan moves from the restrictions imposed on financial institutions in 2018 towards a licensing and supervisory system for virtual-asset businesses.
Pakistan’s Crypto Market Grows Outside Formal Finance
Pakistan has emerged as one of the world's most active crypto markets. TRM Labs ranked Pakistan third globally in its 2025 crypto adoption index, while Chainalysis also placed Pakistan third in its 2025 global adoption index. The methodologies measure crypto activity and adoption rather than providing an audited count of individual users.
The Institute of Strategic Studies Islamabad, in a May 2025 issue brief, estimated that Pakistan had 15 million to 20 million crypto users and more than $20 billion in crypto holdings by 2022, while noting that public adoption had moved ahead of institutional readiness.
The market also has a significant cross-border dimension. The OECD's 2026 Asia Capital Markets Report estimated that Pakistan's crypto-asset inflows were equivalent to about 26% of GDP between June 2024 and June 2025, placing the country among Asian markets with particularly large crypto activity relative to the size of its economy.
Stablecoins are another part of that picture. TRM Labs found that stablecoins accounted for 30% of global on-chain crypto transaction volume in January-July 2025 and identified payments, remittances and preserving value in volatile economic conditions among their practical uses. The OECD likewise identified remittances and currency exchange as emerging stablecoin uses, particularly in jurisdictions with tighter capital controls.
Key Domestic & International Metrics
Crypto inflows: OECD estimated crypto-asset inflows at about 26% of GDP between June 2024 and June 2025.
Earlier domestic estimate: ISSI estimated 15 million to 20 million users and more than $20 billion in holdings by 2022.
Government estimate: PVARA Chairman Bilal bin Saqib later cited around 40 million participants. This is a government estimate and is not directly comparable with activity-based adoption indices.
The Pakistan Business Council has described the domestic virtual-asset sector as having operated in a “regulatory grey zone” for years, with cryptocurrency trading and blockchain-based services neither formally permitted nor clearly prohibited.
From Restriction to Regulation
Pakistan's first major regulatory intervention came in April 2018, when the State Bank of Pakistan directed banks, development finance institutions, microfinance banks, payment-system operators and payment-service providers to refrain from processing, using, trading, holding or transferring virtual currencies and tokens. The same month, SBP issued a separate instruction covering exchange companies.
The measures restricted the involvement of regulated financial institutions but did not establish a licensing and supervisory regime for businesses serving the crypto market. SBP clarified in May 2025 that the 2018 instructions had been issued because there was no legal or regulatory framework for virtual assets, rather than because virtual assets themselves had been declared illegal in Pakistan.
Legal researchers have subsequently described the pre-2026 position in similar terms. A study published in the Journal of Law, Society and Policy Review characterised Pakistan's framework as fragmented and largely prohibitive, with the 2018 SBP circular effectively restricting formal financial-market activity while no comprehensive VASP licensing regime was in place.
Pakistan Virtual Assets Regulatory Architecture Roadmap
The Pakistan Business Council likewise described the virtual-asset sector as having operated in a regulatory grey zone. This meant crypto activity could develop outside the regulated banking and financial-services system even though the institutions through which conventional financial transactions were conducted were restricted from dealing with virtual assets.
By 2025, the policy discussion had begun moving towards a different model. The Finance Ministry's announcement of a dedicated digital-assets authority linked the initiative to FATF-compliant innovation, consumer protection, economic inclusion and global investment. A June 2025 meeting of the Pakistan Crypto Council brought together the finance minister, SBP governor, SECP chairman and senior officials to discuss a draft framework and an autonomous regulatory authority.
Formalisation and International Compliance
Pakistan's move towards regulation reflects a recognition that a large digital-asset market had developed without a formal framework governing the businesses serving it. The Finance Ministry has linked the policy shift to international regulatory standards, financial security, economic inclusion and the potential use of blockchain and tokenisation in the economy.
The international compliance dimension is particularly clear. The Virtual Assets Act 2026 requires PVARA to regulate the sector in line with international standards, while the regulations cover customer due diligence, transaction monitoring, record-keeping, suspicious-activity reporting and sanctions screening.
But formalisation also addresses a domestic market problem. The Pakistan Business Council has described the virtual-asset sector as having operated in a regulatory grey zone, while the Institute of Strategic Studies Islamabad has argued that crypto adoption in Pakistan had moved ahead of institutional readiness.
An analysis published by the LSE Business Review in July 2026 reached a similar conclusion from an international perspective. Legal specialist Zainab Samantash wrote that the Virtual Assets Act provides greater legal certainty for businesses and investors and addresses risks associated with an unregulated market. She also cautioned that the practical operation of the framework would depend on licensing, implementation, coordination, taxation and related governance issues.
The regulatory process itself has also sought input beyond government. PVARA's 2026 consultation invited VASPs, financial institutions, legal and compliance professionals, academics and other stakeholders to comment on the proposed rules. The consultation covered licensing, conduct, prudential requirements, technology, AML/CFT controls and safeguarding and segregation of client assets.
The Virtual Assets Act Creates a Statutory Framework
The Virtual Assets Act 2026 gave Pakistan's regulatory shift a statutory foundation. The law established the Pakistan Virtual Assets Regulatory Authority (PVARA) as the authority responsible for licensing, regulating and supervising virtual asset service providers and issuers, with investor protection, transparency and market integrity among its stated objectives. It also gives PVARA responsibilities covering anti-money laundering, terrorist financing, proliferation financing and other illicit uses of virtual assets in line with international standards.
The law applies to virtual asset service providers carrying on, or holding themselves out as carrying on, virtual-asset services in or from Pakistan. It also covers issuers offering, originating or distributing virtual assets in or from Pakistan. PVARA can determine how an asset, service, activity or issuer should be classified according to its substantive characteristics, function, method of use or economic effect, with consultation with the State Bank of Pakistan or Securities and Exchange Commission of Pakistan where their respective mandates overlap.
This creates a regulatory perimeter that did not exist under the 2018 framework. Instead of leaving crypto businesses outside the formal financial system, the Act establishes licensing and supervision as the basis on which covered virtual-asset services can operate.
But the Act itself does not contain every operational requirement of the new market. It provides the statutory authority and regulatory powers, while detailed licensing, conduct, prudential, technology, AML/CFT and client-asset requirements have been developed through regulations and activity-specific rules. PVARA's regulatory framework sets out the regulations notified on August 21, 2026.
The division between legislation and implementation has also attracted independent scrutiny. Writing in the LSE Business Review in July, Zainab Samantash described the Act as providing greater legal certainty for businesses and investors, while noting that its practical success would depend on how licensing, implementation, coordination, taxation and related governance issues are resolved.
Licensing Blueprint: Capital, Activities and Sandbox Routes
The new system does not treat licensing as a single approval for any form of crypto business. PVARA has established two principal routes: a sandbox-to-licence pathway for firms testing innovative products and an NOC-to-licence pathway for firms seeking to establish or transition into a regulated virtual-asset business.
For existing operators, the NOC route requires an application supported by business and corporate information. After an NOC, the applicant must complete the applicable regulatory requirements, incorporate a company in Pakistan under the Companies Act 2017 and then apply for one or more VASP licence categories. PVARA states that an NOC itself does not authorise a firm to provide virtual-asset services; the business must obtain the subsequent licence.
Minimum Paid-Up Capital Requirements by Activity
The licence itself is activity-specific. PVARA lists categories covering advisory, broker-dealer, custody, exchange, lending and borrowing, derivatives, asset management and investment, transfer and settlement, asset-referenced and fiat-referenced token issuance, and mining-related services. A licence authorises only the categories expressly specified, while activities falling into another category require the corresponding authorisation.
The financial threshold also varies substantially by activity. PVARA's published requirements set minimum paid-up capital at Rs15 million for advisory services, Rs75 million for broker-dealer services, Rs200 million for custody, management and investment, and transfer and settlement services, Rs300 million for the two token-issuance categories, and Rs500 million for exchange, lending and borrowing, derivatives and mining-related services. Applicants must also be incorporated in Pakistan and have at least three directors.
The framework places continuing obligations on the licensed company and its management. PVARA requires fit-and-proper approval for directors and other specified controllers and senior figures, while the board must maintain oversight of governance, risk management, financial-crime controls, safeguarding of customer assets, outsourcing and regulatory reporting. Applicants must also demonstrate AML/CFT systems, cybersecurity arrangements and business-continuity measures.
The breadth of the framework reflects the range of stakeholders PVARA identified when developing the regulations. During its public consultation, the regulator specifically sought submissions from exchanges, custodians, broker-dealers, token issuers, financial institutions, legal and compliance professionals and academics.
The LUMS Centre for Digital Assets Research provides another institutional perspective on the emerging framework. At its May 2026 leadership summit, which brought together regulators, financial institutions, industry representatives and academics, participants examined the regulatory framework alongside potential applications including remittances, tokenisation and digital financial infrastructure. PVARA Chairman Bilal bin Saqib described the objective as developing a regulated, transparent and investor-focused digital-assets ecosystem, while the summit's organisers emphasised collaboration between academia, industry and government in developing the regulatory system.
The Banking Bridge: Conditional Access
The formalisation of virtual assets also changes their relationship with Pakistan's banking system. In April 2026, the State Bank of Pakistan replaced its 2018 prohibition with rules allowing SBP-regulated entities to open accounts for PVARA-licensed virtual asset service providers, subject to specified conditions. The change also allows limited-purpose accounts for entities holding PVARA NOCs while they complete the requirements for a full licence.
From SBP's perspective, the reopening is conditional rather than unrestricted. Before onboarding a VASP, a regulated entity must verify its PVARA licence, conduct due diligence on the business and its customers, risk-rate the relationship and maintain ongoing monitoring. Suspicious transactions must be reported to the Financial Monitoring Unit, and banks remain responsible for compliance with applicable AML/CFT/CPF and foreign-exchange requirements.
The central bank has also drawn a boundary around its own participation. SBP-regulated entities cannot invest, trade or hold virtual assets using their own funds or customer deposits. Where a VASP's business model requires customer-money accounts, the banking framework provides for separate PKR-denominated client-money accounts and prohibits the commingling of customer and VASP funds.
PVARA's April 2026 advisory said financial institutions considering pilots or partnerships involving stablecoins, cross-border payments and blockchain-based financial solutions must first obtain the relevant regulatory authorisation. It directed prospective participants towards the sandbox, no-action relief or NOC mechanisms where applicable.
An independent legal assessment has raised a related question about how the two regulatory systems will operate together. Writing in the LSE Business Review in July, Zainab Samantash noted that SBP's framework permits banking accounts for PVARA-licensed VASPs while imposing separate prudential requirements. She identified coordination between the two regulators as one of the areas requiring clarity as the framework is implemented.
The Pakistan Business Council has also previously called for greater regulatory clarity around virtual assets and described the sector as having operated in a regulatory grey zone. Its position provides a business-sector perspective on the transition from an environment where crypto-related activity developed outside formal financial regulation to one where licensed operators must satisfy both virtual-asset and banking requirements.
Bringing Existing Operators Into the Framework
Pakistan's new framework has to deal with a market that was already operating before the licensing system came into force. PVARA's regulations therefore create a specific transition mechanism for businesses that were providing virtual-asset services on or before March 5, 2026. These “Transitional Persons” were required to apply for an NOC by September 5, 2026 and then proceed towards full licensing.
The NOC is not itself permission to operate indefinitely. PVARA requires the successful applicant to complete the relevant regulatory requirements, establish a subsidiary in Pakistan under the Companies Act 2017 and apply for the appropriate VASP licence. The regulations also give PVARA the power to impose conditions on an NOC and to require additional information or measures before a licence is granted.
Transition Architecture for Existing Operators
The framework also addresses businesses operating from outside Pakistan. PVARA's regulations extend to overseas persons where their activities target or solicit customers in Pakistan, including through websites, applications, PKR payment mechanisms or other channels accessible to people in the country. This brings cross-border virtual-asset providers into the regulatory perimeter where they actively serve the Pakistani market.
The State Bank has created a corresponding transitional mechanism within the banking system. Banks may open limited-purpose accounts for PVARA NOC holders so they can complete the steps required for full licensing. Once licensed, VASPs can obtain banking services subject to SBP's due-diligence, risk-management and reporting requirements.
The need for such a transition reflects the gap identified before the new framework was introduced. An Institute of Strategic Studies Islamabad analysis published in 2025 said cryptocurrency adoption in Pakistan had outpaced institutional readiness and described the policy response as a phased move towards legal clarity and consumer protection.
The Pakistan Business Council has likewise described virtual assets as having operated in a regulatory grey zone and has argued for greater clarity around the sector's regulatory treatment.
From Crypto Regulation to Financial Infrastructure
Pakistan's stated ambitions for virtual assets now extend beyond regulating cryptocurrency trading. Government and financial-sector institutions are exploring whether blockchain and tokenisation can be used for remittances, sovereign debt, broader investor access and other parts of the financial system.
The Finance Ministry has identified several specific areas. In September, Finance Minister Muhammad Aurangzeb said tokenisation should address “real economic needs”, including cheaper remittances, SME financing, sovereign debt and broader financial access. He also said private-sector innovation would need strong state safeguards, inclusive digital infrastructure and international cooperation.
In May, Finance Minister Aurangzeb, PVARA Chairman Bilal bin Saqib and the Finance Ministry's debt-management adviser discussed the tokenisation of sovereign debt instruments and Naya Pakistan Certificates. The government said the discussions were intended to examine whether blockchain infrastructure could modernise capital markets, expand investor access and connect Pakistani financial products with a wider international investor base.
Evolution to Sovereign Financial Rails
PVARA's chairman has also presented digital assets as potential financial infrastructure rather than solely as tradable instruments. In the May discussion, Bilal bin Saqib described programmable infrastructure, real-time settlement and digital networks as potentially important to the future financial system, and linked sovereign-asset tokenisation with wider participation and connections to international digital capital markets. The proposal remained at the exploratory stage, with PVARA, the Finance Ministry and SBP agreeing to continue work on design, governance and phased development.
The Finance Ministry has separately identified blockchain and digital assets in connection with public debt, remittances and government payments, examining these applications within a regulated framework while balancing innovation with financial stability and regulatory oversight.
The IMF's 2026 Pakistan review said integration of virtual assets should align with broader macro-financial policies and called for a structured approach balancing innovation with regulatory safeguards, investor protection and transparency. It specifically identified monetary sovereignty, capital-flow volatility and financial stability as considerations for Pakistan as virtual assets are integrated into the financial system.
The IMF's broader work on tokenisation similarly identifies potential gains from faster cross-border payments, improved market access and more efficient settlement, but notes that tokenised assets and money can also accelerate cross-border capital movements and currency substitution. Its analysis argues that emerging and developing economies therefore need strong domestic policy frameworks and international coordination as tokenisation develops.
Pakistan’s Framework in the International Regulatory Shift
Pakistan's 2026 framework places it within a wider international move towards licensing and supervising virtual-asset service providers rather than leaving the sector outside formal regulation. The Financial Action Task Force's 2026 update says jurisdictions have continued to introduce legislation, licensing and registration requirements for virtual-asset service providers, while identifying continuing gaps in licensing, registration, identification of unlicensed operators and effective risk-based supervision.
Pakistan's own legislation explicitly connects its regulatory framework with international standards. The Virtual Assets Act assigns PVARA responsibility for combating money laundering, terrorist financing, proliferation financing and other illicit activity involving virtual assets in accordance with international standards. PVARA's regulatory framework identifies FATF alignment as a central compliance standard and includes requirements for customer due diligence, transaction monitoring, suspicious-activity reporting, sanctions screening and record-keeping.
Other jurisdictions are building comparable regulatory perimeters, although their institutional arrangements and implementation schedules differ. In the United Kingdom, Parliament approved the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026, bringing specified cryptoasset activities into the Financial Conduct Authority's regulatory perimeter. The FCA's new cryptoasset regime is scheduled to come into force on October 25, 2027, with applications for authorisation opening on September 30, 2026.
The FCA's framework covers activities including cryptoasset trading platforms, dealing and arranging, safeguarding and qualifying stablecoin issuance. Existing firms affected by the new framework must determine whether they require authorisation under the new regime.
The international record also shows why legislation and licensing are only part of the regulatory process. FATF's 2026 assessment identifies continuing problems in jurisdictions where authorities have difficulty identifying unlicensed or offshore providers and supervising activity conducted through peer-to-peer arrangements, unhosted wallets and other channels outside traditional regulated intermediaries.
Pakistan has addressed some of these issues directly through its own framework. PVARA's regulations extend the regulatory perimeter to certain overseas providers serving customers in Pakistan, while the licensing framework requires firms to establish governance, AML/CFT/CPF, technology, cybersecurity and client-asset safeguards.
Critical Regulatory & Implementation Challenges
PVARA's regulations were notified on August 21, 2026, establishing detailed requirements covering licensing, prudential standards, governance, market conduct, technology, AML/CFT/CPF and client-asset protection. The regulator says persons carrying on covered virtual-asset services in or from Pakistan must hold the relevant licence.
Existing businesses have the NOC-to-licence route, while overseas providers can fall within the regulatory perimeter where they target, solicit, promote to or onboard customers in Pakistan.
The FATF's 2026 assessment continues to identify unlicensed and offshore providers, peer-to-peer transactions, unhosted wallets and stablecoins as areas requiring regulatory attention.
Unresolved Legal & Policy Bottlenecks
Under SBP's banking framework, regulated institutions dealing with licensed VASPs must apply due diligence, risk assessment, ongoing monitoring and AML/CFT/CPF controls. PVARA separately requires prior authorisation for pilots involving stablecoins, remittances, cross-border payments and blockchain-based financial solutions.
PVARA's consultation process brought exchanges, custodians, broker-dealers, token issuers, financial institutions, legal and compliance professionals and academics into the regulatory process. The LUMS Centre for Digital Assets Research's May 2026 leadership summit likewise brought regulators, financial institutions, industry representatives and academics together to discuss the framework, tokenisation, digital payments and financial infrastructure.
- Image credit: Sergei Tokmakov, Pixabay
