Pakistan's Crypto Regulators Face the Hard Part
Pakistan has finally moved beyond debating whether cryptocurrency should be allowed and is now focusing on regulating it. The country's regulatory framework for virtual assets, known as the Virtual Assets Act 2026, aims to bring an economy that developed outside the formal financial system into the mainstream.
The new regulatory authority, Pakistan Virtual Asset Regulatory Authority (PVARA), has been established to oversee exchanges, brokers, custodians, transfers, lending, derivatives, advisory services, and other virtual-asset activities. The framework also includes anti-money laundering (AML) requirements, customer due diligence, custody standards, and the FATF Travel Rule.
The real challenge for Pakistan now lies in making five systems work together: virtual-asset regulation, banking, foreign exchange, taxation, and AML enforcement. This is particularly important when it comes to foreign currency transactions, as cryptocurrency can move value across borders in minutes, potentially disrupting the country's balance of payments.
The use of stablecoins, such as USDT or USDC, also raises concerns about capital flight and remittance technology. If rupees can easily be converted into dollar-backed digital assets, it could create a parallel FX market outside the regulated system.