Pakistan has passed a law that establishes a permanent federal framework for the regulation of digital assets.
The move transitions the Pakistan Virtual Assets Regulatory Authority (PVARA) from a temporary entity into a statutory body with broad powers to license, monitor and penalize firms operating within the country.
The Virtual Assets Act 2026 introduces stringent requirements for Virtual Asset Service Providers (VASPs) – businesses that facilitate crypto transactions – mandating that all platforms obtain a federal licence to serve Pakistani residents. Under the new law, firms operating without authorization face severe criminal penalties, including prison sentences of up to five years and substantial fines. The legislation also provides a clear mandate for PVARA to coordinate with the State Bank of Pakistan to integrate digital assets into the national financial system.
This formalization follows months of engagement between the government and crypto companies, including meetings late last year between Pakistan and Binance regarding a $2bn tokenization initiative.
The move is seen as a strategic pivot to move the country away from its previous 2018 ban and toward an environment that prioritizes financial integrity. By establishing a permanent regulator, Pakistan aims to align its digital economy with global standards for anti-money laundering and investor protection.
It follows the UAE which created a dedicated digital assets regulator, VARA, based in Dubai in 2022. Dubai's VARA was particularly active lately, ordering the exchange operators KuCoin and MEXC to cease activities in the emirate or face legal consequences.
