Key Takeaways:

• The cryptocurrency industry is finally regulated in Pakistan.
• The regulator presents a clear framework for crypto service providers looking to operate in Pakistan.
• The regulations have ambiguous clauses that give heavy-handed powers to the government.

The Pakistani lawmakers have finally granted formal legal status to its crypto regulator, the Pakistan virtual assets regulation authority (PVARA). The regulator was initially established in July 2025 to oversee the development of crypto regulations under the Virtual Assets Act.

PVARA now holds the statutory power to license and oversee the crypto industry in Pakistan.

Crypto and Pakistan, by the numbers

Despite the reluctance of local banks and the nation’s central bank to entertain crypto purchases, cryptocurrencies are gaining traction in the nation.

• Pakistan ranks third in global crypto adoption (as of September 2025), behind just India and the US.
• Pakistan’s sustainable development policy institute estimates Pakistani’s held between $20 to $30 billion worth of cryptocurrencies in November 2025.
• Binance has 17.5 million registered Pakistani users on the platform, trading $5+ billion annually.

From a grey area to a regulated industry

Introduction of the PVARA and its regulations comes at a time when local cryptocurrency users are facing increasing ambiguity. Under the new regime, PVARA focuses on three areas: licensing, consumer safety, and financial integrity.

Crypto service providers, be they centralized exchanges, wallet providers, or any custodial services, must secure a formal virtual asset service provider licence from PVARA. The regulation also gives formal protection to users, having strict capital requirements for liquidity and segregation of user funds. Rigorous know your customer (KYC) and anti money laundering (AML) protocols are also required to prevent illicit activities.

Violation by service providers may result in different penalties, including fines of up to $179,000 and imprisonment of the firm’s management for up to five years.

Centralized crypto exchange HTX was the first to apply for a no-objection certificate under PVARA in December 2025, agreeing to comply with regulatory requirements.

Pakistan’s crypto regulation leaves a lot to be desired

While regulation is the right step, bringing in clarity, the legislative wording has ambiguity that can lead to confusion, and even promote the overarching reach of the government.

The ordinance’s rule 19(1)(d) states that the regulator can suspend a service provider if its activities are deemed a threat to financial stability. The broad wording basically gives blanket kill switch power during the nation’s economic volatility.

Rule 40(1) forces service providers to give unrestricted access to the central bank, the federal investigation agency, the tax department, and “other relevant agencies” in real time.

These and other clauses give the regulator draconian powers, without defining reason or any need for a legal warrant. If left unchecked, these may be counterintuitive and stifle the crypto industry, pushing it into a more grey region than before.

Glossary of terms: 

• Centralized exchange: A crypto exchange that operates on traditional technology to offer trading services instead of relying on blockchain technology.
• KYC: Know your customer. A term that covers rules requiring firms to collect basic data on their customers to ensure individuals do not violate financial and other laws.
• AML: Anti money laundering. Laws that are designed to prevent illegal money movement.