Introduction

On July 8, 2025, Pakistan’s President enacted the Virtual Assets Ordinance, 2025 (commonly referred to as the Virtual Assets Act, 2025) via Article 89, establishing the first legal regime for digital assets in the country. This transformative step lays the groundwork for the licensing, compliance, and oversight of virtual assets and cryptocurrencies, bringing structure and security to a rapidly expanding sector.

1. What Does the Law Cover?

1.1 Establishment of PVARA

The law created the Pakistan Virtual Asset Regulatory Authority (PVARA) an autonomous federal regulator responsible for licensing, monitoring, and supervising all virtual-asset entities operating in or from Pakistan.
PVARA’s board includes top officials from the State Bank, Finance, Law, and IT ministries, plus heads of SECP, FBR, and the Digital Pakistan Authority, along with two independent experts in relevant fields.

1.2 Defining ‘Virtual Asset’

The law defines a virtual asset as a digital representation of value that can be transferred, traded, or used for payments or investments, excluding fiat currencies, securities, or any already regulated financial instruments. Importantly, virtual assets are not recognized as legal tender in Pakistan. Cryptocurrency can also be classified as virtual assets thus it will fall under the purview of this act.

1.3 Licensing & Compliance Regime

• All Virtual Asset Service Providers (VASPs)—including exchanges, wallet providers, and token issuers—must obtain a license from PVARA.
• The ordinance sets minimum capital requirements (e.g. Rs 1 billion for fiat- or asset‑referenced tokens), plus strict AML, KYC, operational, and reporting obligations.
• Operating without a license is subject to severe penalties.

This implies if Binance has to operate once the law is in effect, they will need to comply. If Crypto Awaz registers as a crypto entity and/or decides to launch a project we will need to go through the licensing procedure, which provides regulatory safety to users and businesses.

1.4 Encouraging Innovation: Regulatory Sandbox

PVARA will operate a regulatory sandbox, allowing firms to test innovations under supervision before a full commercial launch. This enables safe experimentation while protecting users and financial stability.

1.5 Sharia‑Compliance via Advisory Committee

A Sharia Advisory Committee is mandated to review and endorse any Islamic finance-compatible virtual asset products, ensuring alignment with Islamic finance principles. Licensed firms offering such products must comply with the committee’s rulings.

1.6 Virtual Assets Appellate Tribunal

To resolve disputes, the law establishes a Virtual Assets Appellate Tribunal, composed of experts in law, finance, and technology, offering an independent appeals mechanism against PVARA decisions.

1.7 Non‑Retrospective Scope

The ordinance is not retroactive, transactions before July 8, 2025, are not covered, and cannot be enforced under the new regime.

1.8 Temporary Ordinance Status

Issued under Article 89, the ordinance will remain in force for 120 days unless formally passed by Parliament as a Bill. Initial confusion arose over its naming as “Act” but authorities later clarified its ordinance status.

2. Significance & Strategic Impact

2.1 Bringing Legitimacy & Investor Confidence

This legal framework replaces Pakistan’s previous “grey‑area” in crypto activity, offering transparency, security, and trust for millions of users, investors, and regulated institutions. This may protect users from various scams including bank chain dispute scam.

2.2 Alignment with Global Standards

The law closely aligns with Financial Action Task Force (FATF) recommendations and is modeled after regulatory frameworks in the UAE, EU, India, and Singapore.

2.3 Fostering Innovation

With licensing, sandboxing, and Sharia oversight, the Act balances regulatory rigor with innovation, giving startups and incumbents clarity while enabling new products.

3. The Digital Rupee & Broader Reforms

3.1 CBDC Pilot by State Bank

Shortly after the ordinance, State Bank Governor Jameel Ahmad announced plans for a central bank digital currency (CBDC) pilot, saying Pakistan is “building up our capacity” and hopes to roll it out soon. This is part of the country’s broader modernization agenda.

3.2 Timeline for Pilot Completion

Authorities expect to complete the CBDC pilot within the current fiscal year, which ends in June 2026, integrating digital currency into mainstream digital finance infrastructure.

4. Challenges & Key Considerations

• High capital thresholds (Rs 1B+) may deter smaller firms or startups.
• Maintaining pace with rapid global crypto developments will require ongoing updates to regulation.
• The ordinance requires formal Parliamentary approval to become permanent infrastructure.

5. Conclusion

The Virtual Assets Ordinance, 2025 represents a monumental shift in Pakistan’s digital economy, offering a modern regulatory framework, promoting lawful innovation, and integrating financial integrity with Islamic and global standards. Its pairing with a forthcoming digital rupee pilot further signals the country’s ambition to blend traditional finance with digital transformation, positioning itself as a credible regional digital finance hub. Do share your feedback or concern on Crypto Awaz Socials.