Pakistan's Virtual Asset Regulatory Authority has invited international crypto companies to apply for operating licenses, establishing a federal framework to regulate the digital asset market.

Executive Summary

Pakistan's newly established Virtual Asset Regulatory Authority (PVARA) has formally invited global Virtual Asset Service Providers (VASPs) to apply for operating licenses. This initiative, under the Virtual Assets Ordinance 2025, signals a strategic move to regulate the country's digital asset market, aiming to curb illicit financing while fostering innovation in fintech, remittances, and tokenization.

The Event in Detail

On Saturday, the Pakistan Virtual Asset Regulatory Authority (PVARA) issued Expressions of Interest (EoIs) to major crypto firms. Bilal bin Saqib, PVARA chair and minister of state for crypto and blockchain, stated:

"This EoI is our invitation to the world's leading VASPs to partner in building a transparent and inclusive digital financial future for Pakistan." Eligibility for applicants requires firms to be already licensed by recognized international regulatory bodies. These include the US Securities and Exchange Commission (SEC), the UK Financial Conduct Authority (FCA), the EU VASP framework, the UAE Virtual Assets Regulatory Authority (VARA), or the Monetary Authority of Singapore (MAS).

Required submissions include comprehensive company profiles, details of existing licenses and jurisdictions, proposed services such as trading, custody, and payments, technology and security standards, assets under management, revenues, compliance track record, and a Pakistan-specific business model. Applications are accepted on a rolling basis via email.

Regulatory Framework

The Virtual Assets Ordinance 2025, promulgated on July 8 and published in the Gazette of Pakistan on July 9, empowers PVARA to license, regulate, and supervise VASPs. This framework is designed to align with international standards set by the Financial Action Task Force (FATF), the International Monetary Fund (IMF), and the World Bank. PVARA's mandate encompasses ensuring robust anti-money laundering (AML), counter-terrorism financing (CFT), and cybersecurity measures.

The legislation introduces a regulatory sandbox to allow emerging technologies and business models to be tested under supervisory oversight, with provisions for "no-action letters" for experimental services. Additionally, a Shariah Advisory Committee will be established within PVARA to evaluate virtual asset products and services for compliance with Islamic financial principles, aiming to promote Islamic digital finance products. As an autonomous federal body, PVARA is governed by a multi-stakeholder board, including the Governor of the State Bank of Pakistan, the Chairman of the Securities and Exchange Commission of Pakistan (SECP), and the Chairman of the Federal Board of Revenue (FBR).

Business Strategy & Market Positioning

Pakistan's strategy seeks to establish a secure and innovative digital finance ecosystem by attracting globally compliant VASPs. This approach leverages existing international regulatory benchmarks for eligibility, signaling a commitment to global best practices rather than creating an entirely new, untested framework. The explicit focus on Shariah-compliant products through regulatory sandboxes demonstrates an effort to tailor the digital asset market to local financial customs and expand its appeal within the Islamic finance sector. By requiring prior licensing from established regulators such as the SEC, FCA, and MAS, Pakistan aims to ensure a high standard of operational capacity and compliance from firms entering its market, thereby mitigating risks of illicit finance while fostering legitimate growth.

Broader Market Implications

This regulatory development is poised to significantly bolster Pakistan's fintech and crypto sectors, potentially attracting substantial foreign investment. With over 40 million users and an estimated annual trading volume exceeding $300 billion, Pakistan is recognized as a dynamic frontier market in virtual assets. The initiative is expected to enhance financial inclusion through regulated remittances and tokenization opportunities. By providing a clear regulatory environment, Pakistan aims to gain credibility on the international stage and potentially serve as a model for other developing nations seeking to integrate crypto into their financial systems responsibly. Pakistan's ascent to third place in Chainalysis' 2025 Global Crypto Adoption Index underscores the existing demand and potential for a regulated market, suggesting a cautiously optimistic outlook for regulated growth and the legitimization of crypto's role in the national economy.