Crypto Overview in Pakistan

Regulatory data is for informational purposes only and may not reflect the most current legal developments. Always consult qualified professionals before making decisions.

Legal Classification and Regulatory Framework

Cryptocurrency Status

Pakistan’s relationship with cryptocurrency has undergone one of the most dramatic reversals in regulatory history. For nearly seven years, the State Bank of Pakistan (SBP) maintained an effective prohibition via BPRD Circular No. 03 of 2018, issued on April 6, 2018, which barred banks, development finance institutions, microfinance banks, payment system operators, and payment service providers from processing, facilitating, or holding virtual currencies. That circular remained in force until April 14, 2026, when SBP BPRD Circular Letter No. 10 of 2026 formally revoked it, allowing banks to open accounts for licensed virtual asset service providers (VASPs).

The legal pivot began in earnest in 2025. President Asif Ali Zardari signed the Virtual Assets Ordinance (Ordinance No. VII of 2025) on July 8, 2025, creating the Pakistan Virtual Assets Regulatory Authority (PVARA) as a provisional regulator. The ordinance defined virtual assets as “a digital representation of value that can be digitally traded or transferred and used for payment or investment purposes” while explicitly confirming they are not legal tender in Pakistan. Following parliamentary debate across both houses, President Zardari signed the permanent Virtual Assets Act 2026 into law on March 7, 2026, giving PVARA full statutory powers to license, supervise, and enforce compliance across the virtual asset sector.

Multiple bodies share oversight alongside PVARA. The SECP handles securities classification and investor protection; the FBR administers taxation; the FIA and the National Cyber Crime Investigation Agency (NCCIA) cover anti-fraud enforcement. PVARA’s governing board includes the SBP Governor, SECP Chairman, law and finance ministry representatives, the NACTA Chairman, and the Pakistan Digital Authority Chairman.

Tax Treatment

Pakistan introduced its first formal crypto tax rules effective July 1, 2025. Profits from the disposal of virtual assets are subject to a flat Capital Gains Tax (CGT) of 15% on annual gains exceeding PKR 1 million, mirroring the rate applied to listed securities on the Pakistan Stock Exchange. This rate was introduced partly in response to International Monetary Fund (IMF) conditions attached to Pakistan’s financing programme, which required the FBR to bring crypto into the tax net.

Income from mining, staking, or crypto payments is taxed as ordinary income under the Income Tax Ordinance 2001 (ITO 2001), with progressive slabs from 5% (income up to PKR 600,000) to 35% (above PKR 12 million). The ITO 2001 is being amended to classify virtual assets as “specified financial instruments” with a dedicated capital gains computation schedule. All crypto income must be reported annually via the FBR’s IRIS portal. Licensed exchanges must share transaction data with the FBR; non-compliance carries financial penalties and potential criminal prosecution.

Regulatory Oversight

PVARA operates as an autonomous federal body with powers to acquire property, enter contracts, issue binding guidance, and levy sanctions. Its enforcement toolkit includes administrative penalties, license suspension, and referral for criminal prosecution. Unlicensed VASP operations carry penalties of up to PKR 50 million (approximately USD 179,000) and five years imprisonment; unauthorised virtual asset offerings or promotions carry a separate PKR 25 million fine and up to three years imprisonment.

Pakistan’s framework explicitly incorporates provisions for Shariah-compliant virtual asset products within PVARA’s regulatory sandbox, reflecting the importance of Islamic finance principles in the domestic market. The SBP continues to oversee monetary policy and is developing a Central Bank Digital Currency (CBDC) in partnership with Japanese blockchain firm Soramitsu, funded through Japan’s Ministry of Economy, Trade and Industry. The digital Pakistani rupee pilot, which targets integration with the SBP’s PRISM+ real-time settlement system, aims to reduce remittance costs and expand financial inclusion among the country’s large unbanked population.

Business Environment

Banking Relationships

SBP BPRD Circular Letter No. 10 of 2026, issued April 14, 2026, formally ended the eight-year banking prohibition. Licensed VASPs may now open bank accounts and access payment infrastructure from regulated institutions, a prerequisite for compliant fiat on-ramps and off-ramps. Individual banks retain risk-based discretion over client onboarding, and full normalisation is expected to develop gradually as PVARA licensing matures.

Cross-border cryptocurrency transactions remain subject to foreign exchange regulations under the Foreign Exchange Regulation Act (FERA), which imposes reporting requirements and caps on international transfers. Licensed VASPs must also comply with SBP foreign exchange regulations governing the conversion of virtual assets into Pakistani Rupees and vice versa.

Innovation Support

Pakistan has signalled strong government-level commitment to blockchain innovation. The Pakistan Crypto Council (PCC), established on March 14, 2025 under the Ministry of Finance and led by Bilal Bin Saqib as CEO and Chief Adviser to the Finance Minister, serves as the central policy and industry liaison body. Binance co-founder Changpeng Zhao (CZ) was appointed as a strategic adviser to the PCC in April 2025, bringing international credibility and advisory expertise to the framework-building process.

The government announced the allocation of 2,000 megawatts of surplus electricity for Bitcoin mining and artificial intelligence data centre operations, positioning Pakistan as a potentially competitive destination for energy-intensive blockchain businesses. PVARA’s mandate includes operating a regulatory sandbox to encourage fintech and DeFi innovation, including Shariah-compliant instruments. In January 2026, Pakistan signed a memorandum of understanding with SC Financial Technologies, an affiliate of World Liberty Financial, to explore the use of the USD1 stablecoin for cross-border payments and remittances.

Bilal Bin Saqib was subsequently elevated to Special Assistant to the Prime Minister on Blockchain and Crypto with ministerial rank, and in December 2025 was appointed Chairman of PVARA for a three-year honorary term.

Crypto License in Pakistan

Pakistan operates a formal VASP licensing regime under the Virtual Assets Act 2026, administered by PVARA. All entities wishing to provide virtual asset services in or from Pakistan must obtain a license before commencing commercial operations. An interim No Objection Certificate (NOC) pathway enables applicants to register with the Financial Monitoring Unit for AML compliance and offer restricted services while preparing full license applications. Binance and HTX were the first international exchanges to receive NOCs from PVARA in December 2025.

Licensing Requirements

The Virtual Assets Act 2026 establishes eight categories of regulated VASP activity: cryptocurrency exchanges, custodial services, digital wallet providers, broker-dealers, token issuers, investment platforms, advisory services, and DeFi protocol operators. Each category requires a separate license application, and entities operating across multiple categories must hold the relevant authorisation for each activity.

PVARA’s initial licensing criteria give preference to applicants that already hold valid licences from recognised international regulators, including the United States Securities and Exchange Commission, the United Kingdom Financial Conduct Authority, EU member-state regulators operating under MiCA, the UAE Virtual Assets Regulatory Authority (VARA), and the Monetary Authority of Singapore (MAS). Applicants must demonstrate robust AML/CFT compliance frameworks, including Know Your Customer (KYC) procedures, transaction monitoring systems, and the technical capacity to meet the FATF Travel Rule (Recommendation 16) obligations under the Anti-Money Laundering Act 2010.

Financial requirements include minimum capital thresholds scaled to the category and volume of activity, professional indemnity insurance, and segregated client asset arrangements. Applicants must also submit detailed business plans, ownership and beneficial ownership disclosures, key personnel fit-and-proper assessments, and proposed cybersecurity and operational resilience frameworks.

Authorized Activities

A licensed exchange may offer spot trading, fiat-to-crypto conversion, and custody services subject to the conditions attached to its specific licence. Token issuance and investment products involving virtual assets require separate authorisation. PVARA’s sandbox programme allows firms to test innovative products, including Shariah-compliant tokenised instruments and stablecoin payment rails, under controlled conditions before seeking a full commercial licence.

Licensed VASPs are required to share transaction data with the FBR for tax administration, file Suspicious Transaction Reports and Currency Transaction Reports with the Financial Monitoring Unit (FMU) via the goAML portal, and participate in PVARA’s market surveillance programme. Ongoing compliance obligations include quarterly reporting, annual audits by PVARA-approved auditors, and real-time notification of material operational incidents.

Application Process and Timeline

The licensing process follows three phases. Phase 1 requires submission of an Expression of Interest and supporting documentation; firms already holding a recognised international licence may be fast-tracked. Phase 2 involves detailed review by PVARA, potential requests for additional information, and conditional approval. Phase 3 covers AML registration with the FMU and a pre-launch compliance inspection before the final licence is issued. PVARA has indicated a tiered structure to accommodate operators of different sizes, with lighter requirements for smaller domestic firms. Firms operating without a licence or NOC during the transition period face the criminal penalties established by the Virtual Assets Act 2026.

Market Characteristics

Adoption Patterns

Pakistan ranks among the top three countries globally for cryptocurrency adoption according to the Chainalysis 2025 Crypto Adoption Index, with an estimated 27 to 40 million active users and approximately USD 25 billion in on-chain transactions recorded in 2025. This scale of activity developed almost entirely outside formal regulatory channels during the years of the SBP prohibition, driven by currency volatility, persistent inflation, limited access to traditional financial services, and the practical need for efficient cross-border remittance solutions.

Pakistan receives approximately USD 35 billion in annual remittances. Stablecoins and peer-to-peer crypto transfers became popular tools for reducing the cost of traditional channels, particularly for the large diaspora in the Gulf states, the United Kingdom, and North America. The new framework is expected to channel much of this activity onto licensed platforms subject to tax and AML reporting.

Industry Focus

Remittance infrastructure is the sector most immediately targeted by PVARA’s licensing activity, given the scale of inbound payment flows and the government’s stated goal of capturing a larger share of the USD 300 billion projected on-chain remittance market by 2030. Cryptocurrency mining is a second priority area, with dedicated electricity allocations from surplus national grid capacity aimed at attracting institutional mining operators.

Pakistan’s large freelance workforce has long used cryptocurrency to receive international payments. Formalised channels under the new framework are expected to serve this segment, alongside Shariah-compliant DeFi products and blockchain-based financial inclusion tools being developed within PVARA’s sandbox.

Regulatory Evolution

Pakistan’s transition from prohibition to comprehensive regulation tracks directly with its FATF compliance journey. The country was placed on the FATF grey list in June 2018, the same month the SBP’s crypto circular came into force, and spent four years implementing a 34-point action plan covering money laundering, terrorist financing, and financial supervision. Pakistan was formally removed from the grey list at the FATF Plenary in Paris on October 21, 2022, after meeting all action plan commitments.

The new regulatory architecture draws on international reference frameworks: officials have cited the UAE’s Virtual Assets Regulatory Authority model, Singapore’s MAS licensing approach, and the European Union’s Markets in Crypto-Assets Regulation (MiCA) as key design inputs. The Virtual Assets Act 2026’s Shariah-compliant provisions and its phased licensing structure reflect the domestic market’s specific requirements.

With 240 million people and one of the world’s highest crypto adoption rates, Pakistan’s regulatory choices have regional significance. Execution across PVARA licensing, FBR tax enforcement, and the SBP’s digital rupee CBDC pilot will determine whether the country achieves its stated goal of becoming a leading blockchain hub in South and Central Asia.