Key points:
- Pakistan has around 40 million crypto-linked accounts
- Virtual-asset market estimated at $250 billion
- Regulator seeks to bring grey-market activity into formal system
ISLAMABAD: Pakistan ranks third globally in cryptocurrency adoption, with around 40 million Pakistanis holding crypto-linked accounts and a virtual-asset market estimated at $250 billion.
Pakistan Virtual Assets Regulatory Authority (PVARA) Chairman Bilal Bin Saqib told a Senate committee that between $10 billion and $20 billion in Pakistani money was invested in the sector.
He said most users were below 40, reflecting strong adoption among the country’s young population.
Briefing the Senate Standing Committee on Cabinet Secretariat, chaired by Senator Rana Mahmood-ul-Hassan, Saqib said Pakistan was not seeking to promote cryptocurrency but to regulate an activity that had already gained significant traction.
He said the Pakistan Virtual Assets Regulatory Authority had established its regulatory regime within five months, describing it as one of the fastest such frameworks in the world.
Saqib said PVARA was working with the State Bank of Pakistan (SBP) to develop more cost-effective channels for virtual-asset transactions and bring activity taking place in the grey market into the regulated financial system.
He said virtual assets could also help reduce the cost of remittances.
Pakistan receives around $41 billion in remittances, and lower transaction costs through digital channels could potentially generate an additional $2 billion in foreign exchange, according to Saqib.
The government has moved to establish a formal regulatory framework after years of restrictions on virtual assets.
The SBP has revised its earlier position and allowed regulated banks to provide banking services to PVARA-licensed virtual asset service providers and their customers.
Banks must maintain separate, non-remunerative rupee client accounts for licensed providers and enforce anti-money laundering, know-your-customer and risk-profiling requirements.
Commercial banks, however, remain prohibited from trading, investing in or holding virtual assets using their own capital or customer deposits.
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Their role is restricted to providing banking channels and monitoring transactions involving authorised operators.
Pakistan sets September 5 deadline for NOCs
Saqib said two international virtual-asset companies had received no-objection certificates and were required to complete registration by September 5.
PVARA has warned that existing virtual asset service providers failing to submit NOC applications by the deadline must cease operations.
Cabinet Secretary Kamran Ali Afzal told the committee that cryptocurrency-related businesses would not be permitted to operate without licences.
On taxation, Saqib said India had imposed a 30 per cent tax on virtual assets, while Pakistan was assessing an appropriate rate. Excessive taxation, he warned, could push investors and businesses offshore.
The committee also sought clarification on religious concerns surrounding cryptocurrencies.
Senator Saadia Abbasi referred to the position of religious scholar Mufti Muhammad Taqi Usmani, who has declared cryptocurrency impermissible.
Saqib said he had discussed PVARA’s perspective with Usmani and that a joint statement on the matter was expected.
Saqib said the State Bank’s previous restrictions had hindered Pakistan’s ability to adapt to digital-asset technology.
He mentioned regulatory initiatives in the United Arab Emirates, Hong Kong and Thailand as examples of jurisdictions seeking to establish frameworks for virtual assets.
The regulatory shift is aiming to bring a large but largely informal digital-asset economy under formal oversight.
The regulator intends to enforce licensing, taxation, financial safeguards and compliance requirements designed to distinguish authorised operators from unregulated businesses.
Pakistan’s cryptocurrency sector has expanded despite years of regulatory uncertainty and restrictions on virtual-asset transactions.
The government established PVARA to provide a legal framework for licensing and oversight, with the State Bank subsequently allowing regulated banks to serve licensed digital-asset providers.
The new framework is intended to improve transparency, curb informal activity and attract legitimate investment into the sector.
