Web Desk: Pakistan has enacted a comprehensive legal framework to regulate cryptocurrencies and digital assets after parliament approved the Virtual Assets Act 2026, marking a significant shift for a sector that had long operated without clear rules.
The legislation establishes the Pakistan Virtual Assets Regulatory Authority (PVARA) as the country’s first dedicated regulator for digital asset markets. Officials say the move places a rapidly expanding ecosystem estimated to include more than 40 million users and digital holdings worth roughly $18–20 billion under a structured legal regime.
Until now, cryptocurrency trading and blockchain ventures in Pakistan functioned largely in a regulatory grey area. While millions of users actively traded and invested in digital assets, authorities had not introduced a comprehensive framework governing the industry.
Under the new law, companies providing virtual asset services must obtain a license from PVARA within six months to continue operating. The requirement applies broadly to exchanges, custodians, token issuers and other digital asset service providers, including firms involved in decentralized finance-related activities.
Regulators say the licensing system aims to standardise oversight of platforms offering services to Pakistani users or operating from within the country.
The law also introduces strict penalties for unlicensed activity. Operators that fail to comply could face fines of up to 50 million rupees (about $179,000) and prison sentences of up to five years.
In addition to licensing requirements, the framework outlines several regulatory measures designed to improve transparency and investor protection.
Authorities will impose a 5% capital gains tax on cryptocurrency converted into traditional currency. Meanwhile, digital asset platforms must implement risk-disclosure policies and comply with anti-money-laundering and counter-terrorism financing standards aligned with international regulations.
Officials say the measures are intended to reduce illicit financial flows while integrating Pakistan’s digital asset sector into the formal financial system.
The government has also signaled plans to develop supporting infrastructure for the digital asset industry. Authorities recently allocated approximately 2,000 megawatts of surplus electricity for bitcoin mining operations and artificial intelligence data centers.
Policymakers believe the initiative could help position Pakistan as a regional hub for digital infrastructure and high-performance computing.
The new legislation also fulfills a policy commitment linked to Pakistan’s ongoing reform programme with the International Monetary Fund.
PVARA had initially been established through a presidential ordinance in July 2025. The latest law grants the body permanent statutory authority to regulate companies operating in the virtual asset sector.
The move follows earlier steps aimed at formalizing digital finance. In March 2025, authorities launched the Pakistan Crypto Council to coordinate national policy on blockchain technology and cryptocurrencies, working alongside institutions such as the central bank and the securities regulator.
Analysts say the transition to a regulated environment may force some informal operators out of the market, while new tax obligations could slow speculative trading in the short term.
However, clearer rules may encourage participation by institutional investors, infrastructure providers and global crypto companies that previously avoided markets with uncertain regulation.
With the legal framework now in place, the focus for policymakers and industry participants is likely to shift from whether cryptocurrency will operate in Pakistan to how large the regulated digital asset market could become in the coming years.
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