Pakistan's decisive shift towards the formal integration of virtual assets into its national economy is a monumental development, built upon a meticulously crafted framework and a series of strategic agreements. This policy pivot, formalized by the Virtual Assets Act, 2025, transcends mere legalization; it is a comprehensive strategy to harness the transformative potential of Web3 and blockchain technology for sustainable economic growth and global financial alignment.

The Foundational Framework

The Virtual Assets Act, 2025

At the heart of this new era is the Virtual Assets Act, 2025, which provides the legal and institutional infrastructure for a regulated crypto economy. Key provisions of this landmark legislation include.

Establishment of the Pakistan Virtual Assets Regulatory Authority (PVARA)

This autonomous federal body is the central pillar of the regulatory framework. Its mandate is expansive, covering the licensing, supervision, and monitoring of all Virtual Asset Service Providers (VASPs). PVARA is tasked with developing a structured licensing regime with stringent requirements for operational capacity, corporate governance, and AML/CTF compliance, bringing the sector in line with global best practices, particularly those set forth by the Financial Action Task Force (FATF).

The PVARA Governing Board

The composition of PVARA's board reflects a "whole-of-government" approach. It includes top-tier officials such as the Governor of the State Bank of Pakistan (SBP), the Chairpersons of the Securities and Exchange Commission of Pakistan (SECP) and the Federal Board of Revenue (FBR), and the Secretaries of Finance, Law, and IT. This multi-stakeholder representation ensures a coordinated and comprehensive strategy for the digital asset economy.

A Shariah Advisory Committee

Recognizing Pakistan's commitment to Islamic finance, the Act mandates the creation of a dedicated Shariah Advisory Committee. This body will advise PVARA on the religious permissibility of virtual asset products and services, providing a clear path for the development of Shariah-compliant digital financial instruments.

Regulatory Sandbox

The legislation incorporates a framework for responsible innovation through a regulatory sandbox. This allows emerging fintech and blockchain projects to be tested under supervisory oversight, fostering an environment where innovation can flourish while mitigating systemic risks.

The Role of the Pakistan Crypto Council (PCC)

Established in March 2025, the Pakistan Crypto Council (PCC) is a government-backed initiative designed to spearhead the country's Web3 agenda. Led by Minister of State and CEO, Bilal Bin Saqib, the PCC serves as the primary advisory body to the government on all matters related to virtual assets.

Policy Formulation

The PCC is instrumental in formulating and implementing Pakistan's national crypto strategy, working closely with PVARA to establish a clear and predictable regulatory environment.

International Collaboration

The PCC is actively forging partnerships to position Pakistan as a regional leader. This is evidenced by its recent landmark agreement with Kyrgyzstan to promote bilateral cooperation in cryptocurrency, blockchain, and digital finance. Discussions are also underway for a similar Memorandum of Understanding with the United States following a high-level meeting between Bilal Bin Saqib and US officials.

Strategic Advisory Board

To inject global expertise into its framework, the PCC appointed Changpeng Zhao (CZ), co-founder of Binance, as a Strategic Advisor. During his visit to Islamabad in April 2025, CZ held extensive meetings with the Prime Minister, Finance Minister, and the leadership of the SBP and SECP. His advisory role is to provide guidance on a broad range of topics, from regulatory best practices and infrastructure development to education and market adoption strategies, effectively fast-tracking Pakistan's entry into the global digital finance arena.

The State Bank of Pakistan's Proactive Stance

The SBP, once cautious, has become a key driver of this digital transformation. Its recent initiatives underscore a forward-looking approach

Digital Currency Pilot Program

In a significant announcement in July 2025, SBP Governor Jameel Ahmed confirmed that the central bank is preparing to launch a pilot program for a Central Bank Digital Currency (CBDC). This initiative, developed in collaboration with the Finance Division and the PCC, is a strategic move to modernize the country's payment infrastructure and explore the benefits of a state-backed digital currency.

Mainstream Integration

The SBP is actively working to integrate virtual currencies into the mainstream financial system. High-level meetings with stakeholders, including banks, forex firms, and gold traders, have been held to brief them on the benefits and on the SBP’s plans to issue licenses for crypto trading to these financial institutions, with a view to establishing a secure and transparent ecosystem for digital assets.

Clarification of Legal Status

The SBP has officially clarified that while it previously cautioned against virtual assets, they are not illegal. It has been actively working with the government to create the regulatory framework necessary to manage the risks and opportunities associated with this new technology.

This cohesive and comprehensive strategy, involving legislative action, institutional reform, international collaboration, and proactive central bank initiatives, solidifies Pakistan's position as a serious contender in the global Web3 economy. It signals a new chapter where innovation is embraced, and the once-informal digital asset sector is transformed into a regulated, transparent, and economically vibrant component of the nation's financial future.

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~ Nadeem Afridi