Main Points :
- Pakistan has established the Pakistan Virtual Asset Regulatory Authority (PVARA) under the Virtual Assets Ordinance, 2025, and is now calling international crypto exchanges / VASPs to apply for operating licenses.
- Only firms already licensed by recognized regulators (e.g., U.S. SEC, UK FCA, EU VASP framework, UAE’s VARA, Singapore MAS) are eligible.
- Applicants must demonstrate compliance with AML, CFT, KYC requirements, provide company profiles, technology and security protocols, revenue, assets under management (AUM), proposed business models tailored for Pakistan, etc.
- The Pakistani crypto market is large and growing: over 40 million users, with annual trading volume estimated at around US$300 billion.
- The regulation is intended to align with international norms (FATF, IMF, World Bank), to reduce illicit finance, protect consumers, foster fintech innovation, remittances, tokenization, and Shariah-compliant products via sandboxes.
1. Regulatory Framework & Eligibility Requirements
Pakistan’s newly formed Pakistan Virtual Asset Regulatory Authority (PVARA) operates under the Virtual Assets Ordinance, 2025. Its mission is to bring virtual asset service providers (VASPs) into a regulated environment, enforcing international AML (anti-money laundering), CFT (counter terrorist financing), and KYC (know-your-customer) standards.
Eligibility to apply is restricted to those VASPs which are already licensed by certain recognized regulatory bodies. These include, but are not limited to:
- U.S. Securities and Exchange Commission (SEC)
- UK Financial Conduct Authority (FCA)
- EU’s VASP regulatory framework
- UAE’s Virtual Assets Regulatory Authority (VARA)
- Singapore’s Monetary Authority (MAS)
This suggests Pakistan is limiting entry to firms with proven regulatory credentials, likely to reduce risk and ensure compliance from day one.
2. What Applicants Must Submit
The licensing process requires applicants to submit a comprehensive dossier in PDF format (via email to PVARA) including:
- Company profile: corporate structure, jurisdictions of operation, existing licenses, history of operations.
- Services proposed: whether the firm will provide trading, custody, payments, etc.
- Technology & security protocols: cybersecurity, risk mitigation, safety of assets, etc.
- Financials: revenues, assets under management, possibly proof of solvency.
- Compliance track record: past behavior or regulatory history, AML/CFT/KYC performance.
- Pakistan-specific business model: how the company plans to do business in Pakistan, proposed products, whether Shariah-compliant options will be used, etc.
The subject line of submissions must read: “EoI VASP Licensing — [Company Name]”. Also, the process is rolling (“applications will be accepted on a rolling basis”).
3. Market Size and Strategic Motivations
Pakistan is pushing this regulatory shift at a time when its crypto market is already large and expanding. Some key data points:
- User base: ~40 million people using crypto in Pakistan.
- Annual trading volume: estimated ~$300 billion.
These numbers make Pakistan one of the fastest growing crypto adoption markets globally. The government sees opportunity in leveraging this base via regulation: to harness fintech, remittances, tokenization, Shariah-finance, etc., while controlling risks.
Also, initiatives like earmarking 2,000 MW of surplus electricity for Bitcoin mining and AI centers point to infrastructure ambitions.
4. Recent Developments & Global Context / Challenges
Since this regulatory framework is very new, there are some recent responses, open questions, and comparisons to other jurisdictions that matter for firms thinking of entering.
- The IMF has expressed concerns about Pakistan’s plan to use subsidized electricity for crypto mining given energy shortages, fiscal burden, and the risk of regulatory ambiguity.
- Pakistan has moved up in the Chainalysis 2025 Global Crypto Adoption Index to 3rd place, rising six spots. That enhances its attractiveness for global players.
- There is pushback or caution from some local stakeholders about how to balance strict regulation with innovation, especially for smaller or startup VASPs. There are suggestions (from opinion pieces) that Pakistan should consider tiered licensing, regulatory sandboxes, streamlined application processes, etc., to avoid stifling innovation.
- Also the governance structure of PVARA is multi-stakeholder (involving the State Bank of Pakistan, Securities & Exchange Commission of Pakistan, Federal Board of Revenue) which could help ensure broader oversight, but also pose coordination challenges.
5. Implications for Global VASPs & Potential Risks / Opportunities
Given the above regulatory environment, what should firms / investors / practitioners interested in entering Pakistan or following blockchain trends take note of?
Opportunities:
- Access to a large and growing user base, with high crypto adoption.
- Potential first-mover advantages if you can meet Pakistan’s standards early.
- A regulated framework gives legitimacy, better risk management, possibility to offer services that local users have lacked securely.
- Opportunity to introduce Shariah-compliant crypto products or tokenized asset offerings.
Risks / Challenges:
- High bar for entry: already-licensed elsewhere + strict compliance (AML, KYC, tech security, etc.).
- Regulatory uncertainty: while the law is passed, some details of implementation (licensing fees, oversight, enforcement, electricity subsidies etc.) may still evolve.
- Infrastructure and energy supply concerns (e.g. mining) plus scrutiny by international financial bodies.
- Competition: other emerging markets may move similarly; global VASPs must decide if Pakistan’s rewards justify the costs and compliance overhead.
Conclusion
Pakistan is stepping into a more formal, regulated phase for digital assets. By establishing PVARA under the Virtual Assets Ordinance of 2025, inviting Expressions of Interest from global VASPs, and insisting on rigorous eligibility and compliance, Pakistan is signaling that it wants serious, quality participants. For firms already regulated elsewhere, this is an opportunity; for those exploring new markets, it shows how one emerging market is balancing innovation, inclusion, and risk.
For anyone seeking the next growth market in crypto, Pakistan looks promising—but success will depend on thorough preparation: compliance readiness, strong technical/security infrastructure, thoughtful business models adapted to local norms (including Shariah finance and remittances), and staying alert to regulatory shifts, especially around energy policy, tax, and governance.
