Pakistan”s National Assembly has officially approved the Virtual Assets Act 2026 on March 5, marking a significant legal transition for the country”s burgeoning cryptocurrency landscape. This legislation aims to clarify the regulatory framework surrounding one of the largest informal crypto markets globally, which encompasses approximately 40 million users and between $18 billion to $20 billion in digital assets.
The newly established Pakistan Virtual Assets Regulatory Authority (PVARA) will serve as the exclusive regulatory body overseeing the cryptocurrency sector. PVARA is empowered to mandate licensing for various crypto service providers, including exchanges, wallet services, and custodians. Additionally, it possesses the authority to restrict unlicensed platforms from operating within Pakistan”s jurisdiction and can impose penalties on entities failing to register locally.
As part of its consumer protection measures, the Act requires all licensed platforms to adhere to a Risk Disclosure Framework. This framework aims to ensure that retail investors receive essential information prior to engaging with crypto services, echoing similar regulatory practices observed in the UAE, EU, and UK.
A significant feature of the legislation is the introduction of a 5% capital gains tax that applies to conversions from cryptocurrency to fiat currency. This tax creates a new revenue stream for the national treasury from an asset class that had previously escaped taxation.
The scale of the crypto market in Pakistan illustrates the necessity for this regulation. The estimates shared during the bill”s discussion highlight that over 40 million users are involved in holding digital assets valued between $18 billion and $20 billion. This user base surpasses that of several nations with established regulatory frameworks, emphasizing the urgency for formal oversight.
In 2025, the State Bank of Pakistan (SBP) advocated for regulatory measures instead of outright prohibition, primarily to mitigate capital flight and to formalize the grey remittance market. With a substantial overseas diaspora, Pakistanis often rely on informal channels to send money home. The introduction of a regulated crypto infrastructure could offer a more efficient and cost-effective alternative to traditional remittance methods, which the SBP recognized would otherwise continue to push crypto activities underground.
Aligning with standards set by the Financial Action Task Force (FATF) for anti-money laundering and counter-terrorism financing is also a primary objective of the Act. Pakistan has faced challenges in financial oversight, often landing on FATF”s grey lists. The establishment of a regulated crypto sector with mandatory AML and KYC practices at licensed exchanges is part of a broader strategy to enhance compliance with international financial standards.
The timing of Pakistan”s regulatory shift mirrors a global trend, as numerous countries simultaneously move towards formalizing their crypto regulations. Recent actions include regulatory measures against unlicensed platforms in Dubai, the establishment of a national crypto reserve framework in Kazakhstan, and the submission of an SEC interpretive framework in the U.S.. This synchronized movement likely stems from FATF pressure and the acknowledgment that ignoring informal markets does not eliminate their existence.
