Pakistan's PM Orders Immediate Activation of Crypto Regulator as South Asia's Frameworks Diverge
Pakistan Prime Minister Shehbaz Sharif directed the country's virtual asset regulator to complete its operationalisation without delay on Friday, pushing a framework that has moved from presidential ordinance to functioning law through a compressed legislative process.
Sharif met with State Minister and Pakistan Virtual Assets Regulatory Authority (PVARA) Chairman Bilal Bin Saqib in Lahore on May 1, where he received a status briefing on PVARA's transition into an active licensing body. The Prime Minister said, "An effective regulatory system for virtual assets in line with international standards should be fully operationalised as soon as possible to promote the digital economy in Pakistan and enhance investor confidence," according to a PMO handout cited by Dawn. He also directed authorities to launch dedicated training programmes for youth in artificial intelligence and digital finance.
Where Things Actually Stand
The directive is partly political reinforcement of momentum already underway. PVARA exists as a statutory body and its sandbox is live, but the licensing pipeline remains incomplete. No exchange has received a full operating licence yet. Binance and HTX hold preliminary no-objection certificates, which confirm they have begun the process but do not yet authorise them to serve Pakistani users. Secondary rules governing the sandbox have not been published in full.
The legislative foundation is solid. President Asif Ali Zardari signed the Virtual Assets Act 2026 into law on March 7, converting PVARA from a temporary executive instrument into a permanent federal institution with authority to license, supervise, and penalise virtual asset service providers. Unlicensed operation now carries penalties of up to PKR 50 million (approximately $175,000) and five years in prison.
On April 15, the State Bank of Pakistan lifted the banking prohibition it had imposed in 2018. Under the new rules, SBP-regulated banks may open rupee-denominated accounts for PVARA-licensed entities, subject to strict anti-money laundering and know-your-customer conditions. These accounts are formally structured as Client Money Accounts (CMAs) and carry significant restrictions: they are non-remunerative, cannot accept cash deposits or withdrawals, and are exclusively for authorised VASP transactions. Standard commercial banking access has not been restored.
Banks remain prohibited from holding, trading, or investing in crypto using their own funds or customer deposits.
The Remittance Case
PVARA Chairman Saqib has framed virtual assets as infrastructure for financial inclusion rather than speculation.
Pakistan receives between approximately $30 billion and $38.3 billion in annual remittances, according to figures from CoinDesk, BlockEden, and statements from Chairman Saqib cited by ProPakistani. Most flows are routed through conventional channels that charge fees of 3 to 7 percent and settle over multiple days.
Stablecoin-based corridors can process the same transfers at near-zero cost. The PVARA sandbox explicitly covers remittance use cases, and international capital is already moving toward the sector. ZAR, a stablecoin startup targeting Pakistan's unbanked population, raised $12.9 million in a round with connections to venture firm a16z.
A separate memorandum of understanding was announced in January to integrate the World Liberty Financial USD1 stablecoin for Pakistani payments. Teams assessing that arrangement should note that PVARA's April 27 advisory now requires prior authorisation before any agreement, MoU, or announced pilot enabling virtual asset services can be made public. Whether the January MoU requires retroactive PVARA review under that requirement is a question worth clarifying directly with the authority.
More than 100 million Pakistani adults remain outside the formal banking system, according to figures cited by ProPakistani. That scale of financial exclusion shapes how PVARA's leadership frames the sector's purpose and informs the regulatory emphasis on remittances and inclusion over speculative activity.
A Constraint Worth Noting
Web3 teams looking at Pakistan should read the April 27 PVARA advisory carefully. The authority stated that any agreement, memorandum of understanding, or announced pilot that enables virtual asset services requires prior authorisation before being made public. That includes press releases and partnership announcements. In a broader statement on regulatory philosophy, PVARA noted that "innovation is welcomed, it must operate strictly within a regulated framework to ensure legal compliance, financial integrity, and international standards alignment."
In practical terms, no public go-to-market activity in Pakistan can precede a conversation with the regulator.
South Asia's Divergence
Pakistan's legislative progress places it in a sharply different category from its regional neighbours. The contrast is most striking when set against adoption data. Chainalysis's 2025 index, covering 2024 activity, ranks India first globally in crypto adoption and Pakistan third. Yet Pakistan is the first country in South Asia to pass an act of parliament establishing a permanent regulator with licensing authority and direct banking connectivity. India taxes crypto gains at a flat 30 percent and applies a 1 percent deduction on all qualifying transactions, but no comprehensive licensing framework exists there. The Reserve Bank of India has reportedly continued to advocate against legitimising cryptocurrency, which helps explain why India's regulatory gap persists despite the country's top-ranked adoption rate.
Bangladesh maintains an outright prohibition under 2022 foreign exchange regulations. Sri Lanka similarly restricts crypto activity.
One feature of Pakistan's framework with no direct parallel in Singapore, UAE, or EU regimes is a Shariah compliance requirement. Its implications for DeFi protocols and yield-bearing products remain underreported internationally and warrant close attention as secondary rules take shape.
An estimated 40 million Pakistanis currently hold digital assets, representing roughly 17 percent of the population. The figure is sourced from CoinDesk and BlockEden and reflects 2024 on-chain activity data.
What Comes Next
The immediate milestones to watch are the public release of detailed sandbox participation guidelines, the first full licence issued under the Virtual Assets Act, and the formal output from the industry consultative group PVARA announced on April 30.
That group brings founders, executives, and technologists into the rule-writing process before regulations are finalised. Whether the pace of secondary rule-setting matches the pace of political statements will determine how quickly Pakistan's framework moves from law to operational market.