Pakistan has officially ended years of regulatory uncertainty surrounding digital currencies, marking a pivotal shift in its financial policy. Through the passage of a landmark law to regulate cryptocurrencies and the simultaneous launch of a pilot program for a state-backed digital rupee, the nation is decisively stepping into the future of finance.
This dual-pronged strategy aims to foster innovation and attract investment by providing a clear legal framework for private virtual assets, while also exploring the efficiencies of a public Central Bank Digital Currency (CBDC).
Parliament Passes Virtual Assets Act 2026
The cornerstone of this new policy is the Virtual Assets Act 2026, which has been formally approved by the Parliament of Pakistan. This landmark legislation creates a comprehensive legal framework for the regulation and supervision of virtual assets, including well-known cryptocurrencies like Bitcoin and Ethereum.
The primary goals of the act are to ensure investor protection, promote market transparency, and combat illicit financial activities such as money laundering and terror financing. By establishing clear rules, the law aims to bring Pakistan’s regulatory environment in line with global standards set by the Financial Action Task Force (FATF).
Introducing PVARA: The New Crypto Watchdog
At the heart of the new law is the establishment of the Pakistan Virtual Assets Regulatory Authority (PVARA). This independent federal body is now the country’s official watchdog for the entire digital asset sector.
PVARA is tasked with a range of critical functions, including:
- Licensing: All Virtual Asset Service Providers (VASPs), such as crypto exchanges and digital wallet providers, must obtain a license from PVARA to operate in Pakistan.
- Supervision: The authority will monitor the activities of licensed entities to ensure they comply with all legal and technical standards.
- Enforcement: The Virtual Assets Act empowers PVARA to enforce strict penalties for non-compliance. Unlicensed operations can face fines of up to Rs. 50 million and imprisonment, sending a strong message that illicit activities will not be tolerated.
Read more: Pakistan to complete pilot project for digital currency rollout by June 2026
The Digital Rupee: SBP Launches CBDC Pilot
In parallel with regulating private cryptocurrencies, the State Bank of Pakistan (SBP) is actively developing its own sovereign digital currency, often referred to as the “digital rupee.” In July 2025, the SBP Governor announced that the central bank would launch a pilot program to test the feasibility and benefits of a CBDC.
To execute this, the SBP has partnered with Soramitsu, a leading Japanese blockchain technology firm. The pilot project aims to explore how a digital rupee can enhance financial inclusion for unbanked populations, reduce the costs associated with physical cash management, and modernize the country’s overall payment infrastructure.
A New Era for Digital Finance in Pakistan
The formal regulation of virtual assets and the development of a digital rupee signal a new, progressive era for Pakistan’s economy. By replacing ambiguity with a clear and robust legal framework, the government is creating a secure environment for investors, consumers, and innovators.
This strategic approach allows Pakistan to manage the risks associated with private digital currencies while simultaneously harnessing the potential of blockchain technology for public good. As these initiatives unfold, Pakistan is positioning itself as a credible and forward-thinking participant in the global digital economy.