Pakistan’s crypto test
Pakistan has not discovered crypto. Crypto has discovered Pakistan. For years, virtual assets have been traded and held by Pakistani users without clear domestic licensing. This was never a market waiting outside regulation. It was already inside, moving through phones, offshore exchanges, Telegram groups and informal networks.
That is why the Virtual Assets Act 2026 matters. It creates the Pakistan Virtual Asset Regulatory Authority, or PVARA, to licence, regulate and supervise virtual assets and service providers. Done properly, this is not a surrender to speculation. It is the state admitting that ignoring a market does not make it disappear.
The PVARA is empowered to classify virtual assets by their function, use and economic impact, not by whatever fashionable name a promoter assigns them. That matters because abuse hides behind fashionable words. A product may be sold as ‘innovation’ while functioning like an investment scheme. A wallet marketed as convenient may serve as a cross-border value transfer. Where financial literacy remains uneven, regulation must protect people from technology being used to disguise old-fashioned fraud.
Comparative experience helps, but Pakistan should not copy blindly. The United States shows the cost of fragmentation: digital assets pulled between securities, commodities and money transmission rules, confusing firms and consumers alike. Pakistan should not import that chaos. The PVARA cannot be a lone authority. The Act explicitly requires cooperation with the State Bank, SECP, Financial Monitoring Unit, FBR, and law enforcement, including the timely and secure sharing of supervisory and enforcement information. Market participants should know who regulates what, what requires a licence, and which risks trigger banking, tax or anti-money-laundering oversight.
The UK offers another lesson: consumer protection must begin before a product is sold. Crypto harm rarely starts with code. It starts with advertising, influencers, fake success stories and the promise of one lucky trade. The Act addresses this directly. No person may advertise or market a virtual asset unless the issuer holds a valid licence and all marketing materials must carry prescribed risk disclosures. That is the right instinct. Pakistan now needs the enforcement capacity to match the words.
The UAE shows that clear rules can attract serious firms, but regulatory overlap can confuse the market. Pakistan should make the PVARA the front-door regulator, with clear protocols for when the State Bank, SECP, FMU or FBR must step in. There is, however, a structural tension worth watching. The chairperson is appointed by the federal government, which also retains the power to issue policy directives to the PVARA. Operational autonomy is promised in the Act, but promises require institutional culture to keep them.
Singapore treats digital assets as part of a wider financial technology strategy, not a standalone crypto experiment. Pakistan should follow that instinct. Virtual assets must sit beside payment systems, cybersecurity, data protection and formal remittance channels. Crypto alone will not modernise an economy dependent on cash, informal transfers and weak documentation.
Stablecoins require particular care. The Act appears to set the bar correctly: fiat-referenced tokens must be backed one hundred per cent by high-quality liquid assets held in a segregated reserve, redeemable at par without undue delay, with audited disclosures and robust AML compliance. For Pakistan, remittances are used for school fees, rent, medicine and groceries. The reserve requirement is not bureaucratic caution. It is the difference between a genuine payment instrument and a gamble dressed as one.
Mining is sensitive. The Act wisely excludes pure mining from licensing but subjects operations involving customer assets to full regulation. If mining is permitted at scale, there should be no hidden subsidies and no diversion of electricity from productive use. That battle will be fought outside the PVARA’s mandate, but Pakistan cannot afford to lose it. Licensing must mean something. The Act mandates that licensees hold customer assets in fully segregated accounts and prohibits pledging those assets without the customer’s explicit, informed and revocable written consent. That provision exists because exchanges collapse. Customer money must survive even when the platform does not. Tax treatment remains to be worked out in practice, with FBR’s role likely to be critical.
Success will not be measured by licensed exchanges, glossy conferences or fashionable startups. It will be measured by whether ordinary Pakistanis are protected from anonymous operators, offshore scams and influencer-led traps.
Pakistan’s crypto test is not whether it can sound modern, but whether it can govern modernity. In finance, technology changes. Trust remains the oldest currency.
The writer is an advocate of the high courts and holds an LLM from the University of Pennsylvania Carey Law School.
Disclaimer: The viewpoints expressed in this piece are the writer’s own and don’t necessarily reflect Geo.tv’s editorial policy.
Originally published in The News
