Pakistan Legalizes Cryptocurrency as Investment Asset Under New PVARA Regulatory Framework

Pakistan legalizes cryptocurrency as an investment asset under the new PVARA framework, signaling a major shift from its previous 2018 prohibition.

By: AXL Media

Published: Feb 25, 2026, 4:34 AM EST

Source: Information for this report was sourced from The Diplomat

A Strategic Pivot from Prohibition to Regulation

Pakistan has fundamentally altered its stance on digital currencies, moving from a strict 2018 ban to a structured regulatory environment in early 2026. The transition culminated in the full activation of the Virtual Assets Act, which defines cryptocurrencies as regulated investment assets rather than legal tender. This move allows citizens to legally buy, hold, and trade digital assets through licensed entities, provided they comply with rigorous "Know Your Customer" (KYC) and anti-money laundering (AML) protocols.

The immediate context for this change includes the appointment of industry veterans as advisors to the Pakistan Crypto Council (PCC) and a push by the federal government to integrate blockchain into the national financial infrastructure. By bringing the estimated $21 billion crypto market out of the shadows, the government intends to capture tax revenue and mitigate the risks associated with unregulated underground trading.

Regulatory Oversight and Competitive Landscape

The cornerstone of this new era is the Pakistan Virtual Asset Regulatory Authority (PVARA). Established to act as the primary watchdog, PVARA is responsible for licensing Virtual Asset Service Providers (VASPs). High-profile global exchanges, including Binance and HTX, were among the first to secure local licenses, signaling a competitive race to capture one of the world's most active crypto-adopting populations.

Regulators reviewed the sector with a focus on market concentration and consumer protection. Authorities now mandate that licensed exchanges maintain segregated bank accounts for user funds and undergo regular security audits. This oversight is designed to prevent the fraudulent schemes that previously plagued the country’s informal market, while ensuring that the State Bank of Pakistan (SBP) maintains exclusive control over the national currency.