Pakistan has not discovered cryptocurrencies. Crypto has discovered Pakistan. For years, virtual assets have been traded and maintained by Pakistani users without a clear national license. This was never a market waiting outside of regulation. He was already in, moving through telephones, foreign exchanges, Telegram groups and informal networks.
That’s why the Virtual Assets Act 2026 is important. It creates the Pakistan Virtual Assets Regulatory Authority, or PVARA, to license, regulate and supervise virtual assets and service providers. If done correctly, this does not mean giving in 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 the trendy name assigned to them by a promoter. That matters because abuse hides behind buzzwords. A product can be sold as “innovation” and at the same time function as an investment plan. A wallet marketed as convenient can serve as a cross-border transfer of value. When financial education remains unequal, regulation must protect people from the use of technology to disguise traditional frauds.
Comparative experience helps, but Pakistan should not copy blindly. The United States shows the cost of fragmentation: digital assets move between securities, commodities and money transmission rules, confusing both companies and consumers. Pakistan should not mind that chaos. The PVARA cannot be a solitary authority. The Act explicitly requires cooperation with the State Bank, SECP, Financial Monitoring Unit, FBR and authorities, including timely and secure sharing of supervisory and law enforcement information. Market participants need to know who regulates what, what requires a license, and what risks trigger banking, tax, or anti-money laundering oversight.
The United Kingdom offers another lesson: consumer protection must begin before a product is sold. The damage to cryptocurrencies rarely starts with the code. It starts with advertising, influencers, fake success stories, and the promise of a lucky trade. The law addresses this directly. No person may advertise or market a virtual asset unless the issuer holds a valid license and all marketing materials must contain prescribed risk disclosures. That’s the right instinct. Pakistan now needs the law enforcement capacity to live up to the words.
The United Arab Emirates shows that clear rules can attract serious companies, but regulatory overlap can confuse the market. Pakistan should make PVARA the gateway regulator, with clear protocols on when the State Bank, SECP, FMU or FBR should intervene. However, there is a structural tension that is worth observing. The president is appointed by the federal government, which also retains the power to issue political directives to the PVARA. The law promises operational autonomy, but the promises require an institutional culture to fulfill them.
Singapore treats digital assets as part of a broader fintech strategy, not a standalone crypto experiment. Pakistan should follow that instinct. Virtual assets must coexist with payment systems, cybersecurity, data protection and formal remittance channels. Cryptocurrencies alone will not modernize an economy that relies on cash, informal transfers, and poor documentation.
Stablecoins require special care. The Act appears to set the bar correctly: fiat currency-referenced tokens must be 100 percent backed by high-quality liquid assets held in a segregated reserve, redeemable at par without undue delay, with audited disclosures and strict AML compliance. In Pakistan, remittances are used to pay for school fees, rent, medicine and food. The legal reserve is not a bureaucratic precaution. It is the difference between a genuine payment instrument and a bet dressed as such.
Mining is sensitive. The Act wisely excludes pure mining from licensing, but subjects operations involving client assets to full regulation. If mining is allowed at scale, there should be no hidden subsidies or diversion of electricity from productive use. That battle will be fought outside the PVARA mandate, but Pakistan cannot afford to lose it. Licensing must mean something. The Act requires licensees to maintain client assets in fully segregated accounts and prohibits pledging those assets without the client’s explicit, informed, and revocable written consent. That provision exists because exchanges collapse. Customers’ money must survive even when the platform doesn’t. The tax treatment is yet to be defined in practice, and the role of FBR is likely to be critical.
Success will not be measured by authoritative exchanges, brilliant conferences, or trendy startups. It will be measured by whether ordinary Pakistanis are protected from anonymous operators, offshore scams and traps run by influencers.
Pakistan’s crypto test is not whether it can look modern, but whether it can govern modernity. In finance, technology changes. Trust remains the oldest currency.
The author is a superior court attorney and holds an LLM from the University of Pennsylvania Carey Law School.
Disclaimer: The views expressed in this article are those of the writer and do not necessarily reflect the editorial policy of PakGazette.tv.
Originally published in The News
