The State Bank of Pakistan is set to lift its ban on cryptocurrencies and launch a central bank digital currency, establishing a comprehensive legal ecosystem through the new Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee the nation’s massive $21 billion crypto market.
Regulatory Shift and Legalization
In a groundbreaking move, the State Bank of Pakistan (SBP) is preparing to legalize digital currencies, opening the doors for the nation to embrace a modern financial ecosystem. The Deputy Governor has announced the imminent lifting of the ban on cryptocurrencies, a pivotal shift that aims to transition Pakistan into a regulated digital asset market. “Pakistani citizens can now buy virtual assets; however, the establishment of the legal framework is pending,” stated Dr. Inayat Hussain, emphasizing the need for comprehensive regulations to protect investors and ensure compliance within this burgeoning sector.
The SBP’s plans to introduce its own central bank digital currency (CBDC) underscore its commitment to modernizing the financial infrastructure. Once the legal and regulatory framework is finalized, the SBP will formally rescind its 2018 ban on virtual currencies, marking a significant step towards a regulated trading environment.
The Establishment of PVARA
As part of its regulatory overhaul, Pakistan has established the Pakistan Virtual Asset Regulatory Authority (PVARA), an autonomous federal body responsible for the oversight of virtual assets. The Virtual Assets Ordinance 2025, signed into law by President Asif Ali Zardari, empowers PVARA to license, regulate, and supervise virtual asset service providers across the country. The ordinance was initiated as an urgent measure, highlighting the country’s swift response to the growing global interest in cryptocurrencies.
PVARA’s governing board features a diverse group of representatives, including officials from the SBP, the Finance Ministry, and the Securities and Exchange Commission of Pakistan, alongside independent experts in relevant fields. This collaboration is designed to ensure that PVARA operates with a comprehensive understanding of the financial landscape and the necessary expertise to navigate the complexities of digital assets.
Regulatory Framework and Provisions
The newly established regulatory framework aims to create a structured licensing regime that includes compliance and operational standards tailored for virtual asset service providers. In addition, a regulatory sandbox will allow startups and innovators to test new technologies under the close supervision of PVARA. This forward-thinking approach is crucial for fostering an environment where innovation can thrive while adhering to established legal norms.
Another significant aspect of the regulatory framework is the inclusion of a Sharia Advisory Committee. This committee will ensure that all virtual asset products align with Islamic finance principles, making cryptocurrency trading more accessible to the predominantly Muslim population in Pakistan. Furthermore, PVARA is expected to play a critical role in combating money laundering and terrorist financing, demonstrating a commitment to international compliance and risk management.
Market Context and Impact
Pakistan’s cryptocurrency market is currently valued at an impressive $21 billion, with over 40 million crypto wallets, making it the third-largest crypto-adopting nation globally in 2025. This rapid adoption reflects a broader trend where citizens are increasingly seeking alternative means of investment and financial growth, particularly in a time of economic uncertainty.
This regulatory move is anticipated to transform Pakistan’s financial landscape, potentially positioning the nation as a major player in the global crypto arena. The government’s partnership with World Liberty Financial to establish blockchain infrastructure is a testament to this ambition, further facilitating the growth of the crypto market and innovation at large.
Legislative Process and Recommendations
The legislative journey for PVARA has not been without its challenges. The Senate Standing Committee recommended positioning the Virtual Assets Authority under the Finance Division, a proposal reflecting the nuanced understanding of the complex nature of virtual assets. Moreover, the committee established an upper age limit of 55 years and five years of experience as prerequisites for the authority’s chairperson, aimed at fostering a leadership that is both experienced and innovative.
Senator Anusha Rehman voiced crucial insights during committee discussions, stating, “Young people with five years’ experience need to be accommodated instead of parking lot,” suggesting that fresh perspectives are essential for navigating the evolving digital landscape. Meanwhile, tensions arose as Senator Afnanullah Khan accused the government of duplicating his private member bill, sparking a debate about legislative integrity and collaboration in developing such an important regulatory framework.
A New Dawn in Pakistan’s Financial Landscape
The impending legal framework for cryptocurrencies in Pakistan represents not just a regulatory shift but a transformative opportunity for the country. As citizens prepare to engage in a more structured and secure digital economy, the establishment of PVARA promises to bring legitimacy to the crypto landscape, ensuring safety, compliance, and financial inclusion.
As the world watches closely, Pakistan’s endeavors to regulate and innovate within the cryptographic realm could well redefine its role in the global financial system. With the legal structure beginning to take shape, investors and potential crypto users are encouraged to stay informed and participate in the dialogue surrounding this exciting evolution of currency, technology, and finance.
