PVARA: Pakistan’s New Crypto Regulator and What It Means for the Market

PVARA: Pakistan’s New Crypto Regulator and What It Means for the Market

When Pakistan introduced its first dedicated crypto regulator, the Pakistan Virtual Assets Regulatory Authority (PVARA) became the sole federal body tasked with overseeing all virtual asset activities across the country. Signed into law on July8,2025, the Virtual Assets Regulatory Authority Ordinance2025 marks a dramatic shift from earlier skepticism to a proactive, internationally‑aligned framework. Below you’ll find everything a fintech founder, VASP, or curious investor needs to know about how PVARA works, what it demands, and why it matters for Pakistan’s growing crypto ecosystem.

Why Pakistan Created a Dedicated Authority

Before 2025, cryptocurrency activity in Pakistan existed in a legal gray zone. The State Bank of Pakistan (SBP) repeatedly warned that crypto was not a legal tender, but it never prohibited private trading. That uncertainty discouraged institutional entry and left the market vulnerable to money‑laundering risks.

The government responded by launching three supporting bodies in early 2025:

• The Pakistan Digital Assets Authority (PDAA), focused on technical standards and sandbox programs.
• The Pakistan Crypto Council (PCC), a policy advisory board.
• The Pakistan Virtual Assets Regulatory Authority (PVARA), the enforcement and licensing arm.

By concentrating licensing, supervision, and enforcement in a single autonomous agency, the government aims to provide clear rules, attract reputable players, and align with the Financial Action Task Force (FATF) recommendations.

Core Mandate and Powers of PVARA

PVARA’s charter, embedded in the Virtual Assets Act,2025, gives it sweeping authority:

1. Licensing & revocation: Every virtual asset service provider (VASP) must obtain a PVARA licence before offering trading, custody, payment, or tokenisation services in Pakistan.
2. Technical standards: The authority can set security, AML, and reporting requirements that VASPs must embed in their platforms.
3. Investigations & audits: PVARA can conduct on‑site inspections, request transaction data, and enforce compliance through fines or licence suspension.
4. International coordination: It works with FATF, the International Monetary Fund (IMF), and peer regulators such as the UAE’s VARA and Singapore’s MAS.
5. Sandbox facilitation: Through PDAA, PVARA can grant temporary licences to test Shariah‑compliant products, cross‑border remittance solutions, or CBDC‑linked services.

BilalbinSaqib, the authority’s chair and minister of state for crypto and blockchain, repeatedly emphasizes that the goal is “transparent and inclusive digital finance” while keeping the system clean from illicit flows.

Licensing Process: From Expression of Interest to Full Operation

International firms looking to enter Pakistan must first submit an Expression of Interest (EoI). The EoI packet includes:

• Company profile and corporate structure.
• Copies of existing licences from recognised regulators (e.g., US SEC, UK FCA, Singapore MAS).
• Proposed service scope - trading, custody, payments, or tokenisation.
• Technical and security architecture, including KYC/AML controls.
• Assets under management (AUM) figures and revenue forecasts.
• Compliance track record and any past enforcement actions.
• A business model tailored to Pakistan (e.g., remittance‑focused services for overseas workers).

Once the EoI is approved, applicants move to a formal licence application where PVARA conducts a detailed audit. The process typically takes 90‑120days, though timelines can shrink for firms that already meet FATF‑aligned standards.

Key compliance checkpoints include:

• Robust KYC procedures that capture Pakistani national ID (CNIC) data.
• Real‑time transaction monitoring linked to SBP’s AML database.
• Periodic SAR (Suspicious Activity Report) filing to the Financial Monitoring Unit.
• Segregated custodial wallets for Pakistani users, with multi‑signature controls.

Failure to meet any of these can trigger fines up to10millionPKR or licence suspension.

How PVARA Aligns with Global Standards

The agency’s framework mirrors successful models in the United Arab Emirates, Singapore, India, and the European Union. Below is a quick side‑by‑side look:

By adopting a similar structure, Pakistan positions itself as a credible destination for regulated crypto activity, especially for firms targeting South Asian remittance corridors.

Impact on the Pakistani Crypto Market

Estimates from local fintech analysts suggest that Pakistan has over 40million crypto‑savvy adults, with daily trading volumes climbing above$1.2billion as of mid‑2025. The introduction of PVARA is expected to:

• Reduce illicit flows: Mandatory AML reporting will make it harder for terrorist financing networks to hide behind anonymous wallets.
• Attract foreign capital: Reputable VASPs can now launch operations with legal certainty, unlocking potential inflows of up to$500million in the first two years.
• Boost fintech innovation: Sandbox‑approved projects can experiment with Shariah‑compliant tokenisation of assets such as agriculture produce, real‑estate, or government bonds.
• Enable cross‑border remittances: Crypto‑based remittance solutions, once licensed, could cut costs for the 15million Pakistanis working abroad.

Crucially, the framework also protects retail investors. PVARA mandates clear disclosure of fees, risk warnings in Urdu and English, and a maximum exposure limit for first‑time traders (currently set at$5,000). Violations trigger consumer‑protection fines and potential bans.

CBDC and the Future of Digital Finance in Pakistan

The State Bank of Pakistan (SBP), led by Governor JameelAhmad, announced a pilot Central Bank Digital Currency (CBDC) program in September2025. While the CBDC pilot operates under SBP’s own sandbox, it will interoperate with PVARA‑licensed VASPs for last‑mile distribution. This creates a two‑track ecosystem:

1. Private crypto services that comply with PVARA rules.
2. Public‑sector digital money that leverages the same AML/KYC infrastructure.

For VASPs, this means a potential new revenue stream - providing wallet integration and settlement services for the upcoming digital rupee.

Practical Steps for Companies Seeking a PVARA Licence

If you’re a startup or an established exchange eyeing the Pakistani market, follow this quick checklist:

• Assess eligibility: Ensure you hold a licence from a recognised regulator (e.g., FCA, SEC, MAS).
• Prepare documentation: Compile corporate, financial, and compliance records well before the EoI deadline.
• Localise compliance: Implement CNIC‑based KYC, integrate with SBP’s AML API, and provide Urdu language disclosures.
• Engage a legal partner: Pakistani law firms experienced in virtual‑asset regulation can help navigate the licensing questionnaire.
• Plan for sandbox participation: If you’re testing a novel product (e.g., tokenised sukuk), draft a pilot proposal for PDAA.
• Monitor updates: PVARA issues circulars every quarter - subscribe to their official bulletin.

Sticking to this roadmap dramatically reduces the risk of costly re‑submissions.

Common Pitfalls and How to Avoid Them

Looking Ahead: What 2026 Might Hold for PVARA

Analysts predict three major developments for the next year:

1. Full‑scale CBDC rollout: The digital rupee could become a settlement layer for licensed exchanges.
2. Expanded sandbox categories: Expect approvals for tokenised agricultural commodities and Islamic finance products.
3. Regional hub potential: With clear rules, Pakistan may attract firms serving Bangladesh, Nepal, and Sri Lanka from a single licensed base.

Staying ahead means monitoring PVARA’s quarterly circulars, joining the Pakistan Crypto Council’s working groups, and preparing for cross‑border cooperation frameworks that the authority is already drafting with the UAE’s VARA and Singapore’s MAS.

Frequently Asked Questions

Do I need a PVARA licence to hold crypto as an individual?

No. PVARA only regulates service providers such as exchanges, custodians, and payment gateways. Individuals can hold crypto in personal wallets without a licence, but they must comply with any tax reporting obligations.

What is the typical timeline for obtaining a full licence?

After a successful EoI, the detailed licence application usually takes 90‑120days, assuming all AML/KYC systems are in place and documentation is complete.

Can foreign exchanges operate in Pakistan without a local office?

PVARA requires a registered local entity or a certified representative office for licence eligibility. Remote‑only operations are not permitted.

How does PVARA enforce FATF‑style AML standards?

All licensed VASPs must integrate with the Financial Monitoring Unit’s real‑time screening API, file SARs for suspicious transactions, and retain records for at least five years.

Is there a limit on how much crypto a retail user can trade?

For first‑time retail traders, PVARA caps daily exposure at $5,000 until the user completes an enhanced KYC process. The limit can be raised after additional verification.