Sign in Subscribe
Online assets

Regulating Digital Assets in Pakistan: A Delicate Balance between Innovation and Risk Management

Strategic Insights

— 2 min read

The creation of the Pakistan Virtual Assets Regulatory Authority (PVARA) has sparked debate on the need for regulation of digital assets (DAs) in Pakistan. While the original design of cryptocurrencies envisioned a decentralised digital asset, free of government oversight or control, some degree of regulation is inevitable for the sector to grow and succeed. The financial sector is the most closely regulated sector globally, and the International Organisation of Securities Commissions (IOSCO) has laid out three core objectives of regulation: protecting investors, ensuring fair and transparent markets, and reducing systemic risk.

Key Takeaways:

  • The Pakistan Virtual Assets Ordinance (VAO) created the Pakistan Virtual Assets Regulatory Authority (PVARA) in July 2025, establishing a third regulatory body for digital assets.
  • The need for a new regulatory body is questionable, as Pakistan has a history of external pressures compromising the working of regulatory bodies, and the SBP and SECP have decades of rich experience and a certain clout and track record.
  • The International Organisation of Securities Commissions (IOSCO) has three core objectives of regulation: protecting investors, ensuring fair and transparent markets, and reducing systemic risk.
  • The IOSCO advocated for optimal consistency in the regulation of crypto-asset markets and securities markets in November 2023.
  • Regulation should strike a balance between managing risk and innovation, with the onus on industry to innovate, not the regulator.
  • Licensing for digital asset activities will be critical, with only credible parties being licensed, and subsequent supervision will be stringent.
  • Stablecoins, a special kind of cryptocurrency, will probably be the first to be permitted, as they are backed 1:1 with real assets, eliminating speculation and price fluctuations.
  • Digital assets hold the promise of great innovation, particularly in improving inward remittances and delivering financial inclusion to a large number of citizens in an informal, underbanked system like Pakistan.

Statistics:

  • Pakistan has a history of external pressures compromising the working of regulatory bodies.
  • The SBP and SECP have decades of rich experience and a certain clout and track record.
  • 80% of the world's countries have a multi-regulator model for financial markets (International Organisation of Securities Commissions, 2023)
  • 2 countries have separate regulators for digital assets globally - the UAE and El Salvador.
  • 56 countries have a single regulator for digital assets or a combination of regulators (International Organisation of Securities Commissions, 2023)
  • In July 2025, the US enacted the GENIUS Act, its first federal law establishing a framework for stablecoins.

Sources:

  • Pakistan Virtual Assets Ordinance (VAO)
  • International Organisation of Securities Commissions (IOSCO)
  • SBP and SECP
  • GENIUS Act (US federal law)
  • International Organisation of Securities Commissions (2023) - IOSCO Annual Report

Read more