ISLAMABAD: Pakistan's Senate passed the Virtual Assets Bill 2026 on Friday, February 28, converting a temporary presidential decree into proposed parliamentary law and cementing the legal foundation for the Pakistan Virtual Asset Regulatory Authority (PVARA). Finance Minister Muhammad Aurangzeb moved the bill himself, with Senate procedural rules suspended to allow immediate consideration, a reflection of the urgency: the underlying ordinance that created PVARA was set to automatically lapse in early March after two consecutive 120-day extensions. The Senate vote also resolves a source of public confusion: the original ordinance had been publicly described in some government communications as the "Virtual Assets Act, 2025," leading to uncertainty about whether full parliamentary approval had already been granted.

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Why the Senate Acted Now

PVARA was originally established by President Asif Ali Zardari via a presidential ordinance on July 8, 2025, a constitutional instrument that carries the force of law but expires unless converted to legislation. The Senate had extended it twice, buying time for a permanent bill. With those extensions exhausted, Friday's vote was the last viable window before the authority would have dissolved.

The bill now heads to Pakistan's National Assembly (lower house) for approval before receiving Presidential assent to become a full Act of Parliament. Until that process completes, PVARA is expected to continue operating under the existing ordinance framework, pending legal confirmation of the precise continuity mechanism following the Senate vote.

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What the Law Does

The legislation formally constitutes PVARA as an autonomous corporate body with broad authority to license, regulate, and supervise virtual asset service providers (VASPs), a category that includes cryptocurrency exchanges, wallet providers, and token issuers. It also empowers PVARA to "promote, develop, govern, and regulate the adoption, deployment, and scalable use of blockchain technology" across Pakistan.

Penalties are significant. Operating a virtual asset service without a licence carries up to five years imprisonment and a Rs 50 million fine (approximately $180,000 USD at roughly 278 PKR/USD as of late February 2026; conversions are approximate given the rupee's historical volatility).

Conducting an unlicensed initial virtual asset offering (a public token sale) can result in three years imprisonment and a Rs 25 million fine. Separate penalties target market manipulation and insider trading.

Stablecoin issuers face a minimum capital requirement of Rs 1 billion (roughly $3.6 million at the same approximate rate), a threshold that analysts expect will favour established global players over domestic startups.

One noteworthy protection for users: the framework does not criminalise personal crypto ownership. Penalties are directed at unlicensed service providers, not individual holders. Equally important for clarity: the legislation does not designate virtual assets as legal tender. Formal regulation and legal tender status are distinct categories, and this bill addresses only the former.

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The Market Behind the Law

The legislation arrives in a country where cryptocurrency has quietly become a major financial infrastructure. Pakistan counts approximately 27.1 million active crypto users (the third-largest user base globally, behind only the United States and India) and added approximately 5.4 million new users in 2025 alone. The country saw an estimated $25 billion in crypto transactions processed in 2025, comparable in scale to the country's informal remittance economy. Separate estimates place Pakistan-linked crypto trading activity at over $300 billion annually, a substantially larger figure that reflects trading volume rather than net processed transaction value, and drawn from different sourcing.

That adoption was driven in part by economic stress: the Pakistani rupee has lost roughly 60% of its value against the US dollar since 2018, and Pakistan has an estimated 100 million unbanked adults. Peer-to-peer stablecoin trading, largely on Binance's P2P platform, became a practical hedge against currency devaluation for millions of ordinary users. Crypto remittances grew 18.7% year-over-year, with mobile money services JazzCash and Easypaisa, used by over 80 million Pakistanis, serving as the primary rupee-to-stablecoin bridge.

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Exchanges and Early Movers

PVARA issued No Objection Certificates (NOCs) to Binance and HTX on December 12, 2025, permitting local subsidiary registration and anti-money laundering onboarding, but stopping short of a full commercial launch authorisation. Full licences remain contingent on PVARA finalising its licensing regulations, a process that is expected to await the bill's full enactment into law.

Binance separately signed a memorandum of understanding with Pakistan to explore tokenising up to $2 billion in Pakistani sovereign and real-world assets. In January 2026, PVARA also signed an MoU with a firm linked to the World Liberty Financial (WLFI) project (a crypto venture associated with the Trump family, according to reporting by CoinDesk) to develop stablecoin-based cross-border payment infrastructure.

Finance Minister Aurangzeb framed Pakistan's approach as deliberate and internationally oriented. "Our focus is to stay ahead of the curve by engaging with credible global players, understanding new financial models, and ensuring that innovation, where explored, is aligned with regulation, stability, and national interest," he said in January 2026.

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Regional and Compliance Context

Pakistan's bill is explicitly FATF-aligned, a politically important signal given the country's history on the Financial Action Task Force's "grey list," from which it was removed in 2022 after years of anti-money laundering reforms. The framework requires KYC (know-your-customer) standards, transaction reporting above Rs 1 million, and coordination with Pakistan's Financial Monitoring Unit.

The bill includes a regulatory sandbox provision, offering Web3 developers a compliant testing path without immediate full licensing requirements. PVARA's governance structure is anchored by a nine-member board that includes the State Bank of Pakistan governor, the Securities and Exchange Commission of Pakistan chairperson, the Pakistan Digital Authority chairperson, secretaries from the Finance and Law ministries, the National AML/CFT Authority chairman, and two independent directors with digital finance expertise.

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What Comes Next

Pakistan's P2P trading ecosystem, which grew precisely because of the prior regulatory vacuum, now faces increasing formalisation pressure as PVARA's reporting infrastructure expands. Traders and informal brokers who have operated outside the banking system will likely face growing scrutiny from the FMU's goAML transaction monitoring system.

The bill also establishes a Virtual Assets Appellate Tribunal, giving exchanges and users a formal legal channel to challenge PVARA decisions within 30 days, a layer of recourse that did not exist under the ordinance.

For the framework to take full effect, the National Assembly must still pass the bill. If it does, Pakistan will join the UAE, EU, India, and Singapore (countries the legislation explicitly cites as regulatory models) in having a comprehensive statutory framework for digital assets. The bill's text states the intent plainly: to attract virtual asset companies to base their businesses in Pakistan, in direct competition with established crypto hubs in the Gulf and Southeast Asia. That competitive ambition is set against a varied regional backdrop: India has taken a restrictive fiscal approach, levying a 30% tax on crypto gains alongside transaction deduction requirements, while Bangladesh and Sri Lanka maintain largely prohibitive stances toward digital assets. For Pakistan, the bill represents not just a regulatory framework but a calculated bid for regional market leadership.