TLDR
- Pakistan’s crypto market exceeds $300B in annual trading volume, with 40M users.
- PVARA licensing invites global exchanges with recognized international licenses.
- New regulations align with FATF, IMF, and World Bank standards.
- Pakistan introduces regulatory sandboxes for Shariah-compliant crypto solutions.
Pakistan has officially opened the doors to international cryptocurrency exchanges by launching a new licensing system. The Pakistan Virtual Asset Regulatory Authority (PVARA) is now inviting global digital asset service providers to apply for operating licenses, signaling a move toward formalizing the country’s growing cryptocurrency market. This step aims to bring structure and regulatory oversight to an industry that has largely operated in a legal grey area until now.
New Regulatory Framework for Crypto in Pakistan
The establishment of the Pakistan Virtual Asset Regulatory Authority (PVARA) is a response to the increasing demand for regulatory clarity in the country’s cryptocurrency sector. This move follows the passing of the Virtual Assets Ordinance 2025, which was enacted in July to set up a formal framework for managing digital assets in the country. According to government officials, the aim is to provide a transparent regulatory environment that will encourage investor confidence and reduce risks such as fraud and money laundering.
Pakistan’s cryptocurrency market is substantial, with over 40 million users and annual trading volumes exceeding $300 billion. Despite this, the market has remained largely unregulated, leaving room for illegal activities and poor consumer protection. The creation of PVARA is seen as an effort to bring structure to this rapidly expanding market while aligning with international regulatory standards.
Eligibility Requirements for Licensing
The new licensing system will only allow exchanges and digital asset service providers that are already licensed by globally recognized authorities to operate in Pakistan. This includes firms that are registered with agencies like the U.S. Securities and Exchange Commission (SEC), the UK Financial Conduct Authority (FCA), the European Union’s Virtual Asset Service Provider (VASP) framework, the UAE’s Virtual Assets Regulatory Authority (VARA), and the Monetary Authority of Singapore (MAS).
Companies applying for the license must meet strict compliance requirements, including anti-money laundering (AML) and counter-terrorism financing (CTF) measures. They will also need to demonstrate a solid know-your-customer (KYC) framework, ensuring customer protection. Applicants must provide detailed submissions, covering aspects such as company profiles, services offered, technology used, and compliance history.
“Only the most transparent and compliant firms will succeed,” stated a spokesperson for PVARA, emphasizing the authority’s commitment to building a safe and reliable market.
Focus on Consumer Protection and Innovation
While the regulatory environment in Pakistan is becoming clearer, the government also seeks to foster innovation in the crypto space. To achieve this, PVARA will introduce regulatory sandboxes. These will allow companies to test new products and services in a controlled environment, including those that cater to the country’s specific needs, such as Shariah-compliant financial solutions.
The new framework is aligned with guidelines from the Financial Action Task Force (FATF), the International Monetary Fund (IMF), and the World Bank. This alignment with global standards will help improve Pakistan’s standing in the international crypto community, encouraging further investment into the country’s digital economy.
The main goal is not only to regulate but also to protect consumers and prevent illicit financial activities. By offering clear and enforceable regulations, the government hopes to provide both local and international businesses with the certainty needed to operate effectively in the market.
PVARA’s Role in Shaping Pakistan’s Crypto Future
The PVARA will be governed by a board that includes representatives from key government bodies such as the State Bank of Pakistan, the Securities and Exchange Commission of Pakistan, and the Federal Board of Revenue. This multi-stakeholder approach is designed to ensure that regulatory decisions reflect the interests of various sectors within the financial and economic systems.
PVARA’s primary objectives include ensuring consumer protection, securing digital asset transactions against fraud, and preventing illegal financial activities. These priorities reflect the government’s intention to create a balanced regulatory environment that supports both innovation and safety in the growing digital asset market.
By offering licensing and regulatory clarity, Pakistan is positioning itself as a potential hub for cryptocurrency and blockchain development in the region. With a large and growing user base, the country is looking to attract reputable international crypto exchanges and service providers to help manage and grow its digital economy.
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