Pakistan Crypto Regulation 2025: From Ban to Legalization Explained

In 2025 Pakistan the South Asian nation with a $21billion underground crypto market flipped its stance on digital currencies, moving from a 2018 ban to a full‑blown legalization framework. The shift didn’t happen overnight; it was the result of months of political bargaining, technical drafting, and pressure from a restless crypto community. If you’ve been watching the news, you’ve probably heard the headline about the Virtual Assets Bill 2025 the legislation that officially legalised cryptocurrencies and created a new regulator. Below is a plain‑English guide that shows what changed, what still stays off‑limits, and why the world is paying attention.

Quick Takeaways

• The State Bank of Pakistan dropped its 2018 advisory against crypto in September 2025.
• The Virtual Assets Bill 2025 created the Pakistan Virtual Asset Regulatory Authority (PVARA) to license and supervise all crypto‑related services.
• Holding and transferring Bitcoin, Ethereum and other tokens is now legal, but using them for retail payments or open‑market trading is prohibited.
• Pakistan will launch a state‑controlled Digital Pakistani Rupee a Central Bank Digital Currency (CBDC) designed for remittances and fintech pilots later this year.
• The new rules aim to bring $21billion of hidden crypto activity into the formal economy while keeping strict government oversight.

How the Pivot Unfolded: Timeline of Key Events

Understanding the chronology helps you see why the final framework looks the way it does.

1. 2018 - The State Bank of Pakistan (SBP) issued an advisory banning banks from dealing with crypto.
2. May212025 - The Pakistan Digital Assets Authority (PDAA) received initial approval, signalling a policy rethink.
3. June22025 - A technical committee comprising the Finance Minister, SBP, the Securities and Exchange Commission of Pakistan (SECP) and the ministries of Law and IT was formed to draft regulations.
4. July82025 - President AsifAliZardari issued an ordinance enacting the Virtual Assets Bill 2025 the legal backbone for crypto in Pakistan and establishing PVARA the Pakistan Virtual Asset Regulatory Authority.
5. July92025 - Central Bank Governor Jameel Ahmad announced a pilot program for the Digital Pakistani Rupee.
6. September32025 - Acting Deputy Governor DrInayat Hussain publicly confirmed that SBP would withdraw its 2018 advisory once the bill became law.
7. September2025 - The Senate Standing Committee gave a green light for the bill’s final approval, completing the regulatory pivot.

What the Virtual Assets Bill Actually Does

The bill is a dense legal document, but its core provisions can be boiled down to five pillars.

• Licensing & Supervision: All virtual asset service providers (VASPs) must obtain a license from PVARA the autonomous regulator tasked with overseeing crypto businesses.
• AML/CFT Controls: Licensees must implement robust anti‑money‑laundering and counter‑terrorism‑financing systems, including real‑time transaction monitoring.
• Data Privacy & Consumer Protection: The bill mandates encryption standards, clear dispute‑resolution pathways, and penalties for fraud.
• Restrictions on Use Cases: Crypto can be held and transferred, but it cannot be used for retail payments, open‑ended investment trading, or as legal tender.
• CBDC Framework: The legislation authorises the creation of the Digital Pakistani Rupee, a state‑controlled CBDC, and sets a roadmap for its pilot launch.

Who’s in Charge? The New Regulatory Landscape

Several bodies now share oversight responsibilities.

• State Bank of Pakistan (SBP) the central bank that governs monetary policy and now backs the CBDC initiative - final authority on licensing and enforcement.
• PVARA the regulator that issues crypto licences, audits VASPs and ensures compliance with AML rules - operational day‑to‑day oversight.
• Pakistan Crypto Council (PCC) an advisory body that steers long‑term crypto strategy and talent development - policy guidance.
• Securities and Exchange Commission of Pakistan (SECP) regulates securities‑related token offerings and protects investors - market‑level supervision.

All four entities must coordinate through the technical committee created in June 2025, ensuring that crypto policy aligns with broader financial stability goals.

What You Can (and Can’t) Do with Crypto After September2025

For everyday users, the new rules translate into a clear checklist.

• Allowed:
  • Buy, hold, and transfer Bitcoin, Ethereum, and approved altcoins on licensed exchanges.
  • Use crypto for cross‑border remittances through approved VASPs.
  • Participate in government‑approved fintech pilots that leverage blockchain for identity or supply‑chain tracking.
• Not Allowed:
  • Spend crypto directly at retail stores or e‑commerce platforms.
  • Trade crypto on unlicensed peer‑to‑peer platforms or engage in margin trading.
  • Issue new tokens without SECP approval.

Violations can trigger fines up to 5% of annual turnover or revocation of licences, so compliance is taken seriously.

How Pakistan’s Model Stacks Up Against Other Countries

Below is a snapshot comparison that highlights the key differences.

Pakistan’s stance sits between China’s outright ban and the U.S.’s relatively open market. The biggest differentiator is the simultaneous allowance of private crypto holdings while the government rolls out its own digital rupee.

Market Impact: What the Legalisation Means for Investors and the Economy

Bringing the $21billion underground market under the tax net could boost fiscal revenues by an estimated $400million annually, according to local economists. Foreign fintech firms are now eyeing Pakistan as a potential hub for remittance‑focused blockchain solutions, because the bill explicitly allows licensed VASPs to operate cross‑border payment corridors.

However, the strict prohibition on retail use may deter startups that want to build crypto‑powered commerce platforms. Analysts predict that, in the short term, capital will flow into compliance services, AML tooling, and CBDC‑related infrastructure rather than speculative trading platforms.

Implementation Hurdles and the Road Ahead

Even with the law on the books, real‑world roll‑out faces three major challenges.

1. Licensing Bottleneck: PVARA must vet dozens of existing exchanges, many of which operated in legal limbo. Early reports suggest a 6‑month backlog before all VASPs are cleared.
2. Technical Infrastructure for the Digital Pakistani Rupee: Building a CBDC requires secure wallets, interoperability with legacy banking systems, and rigorous testing. The pilot expected for early 2026 will likely involve a limited user group of overseas workers.
3. Enforcement & Education: Small‑scale traders need clear guidance on what constitutes a prohibited activity. The government has launched a series of webinars, but awareness gaps remain, especially in rural provinces.

Stakeholders expect a phased expansion of permissible activities. A 2027 amendment could relax the retail‑payment ban if AML controls prove effective.

Next Steps for Crypto Enthusiasts in Pakistan

• Verify that any exchange you use holds a valid PVARA licence - the regulator’s public registry will list all approved VASPs.
• Keep transaction records for at least five years to satisfy future tax and audit requirements.
• Watch for the Digital Pakistani Rupee pilot announcement - early participants may receive incentives for onboarding.
• Engage with community groups on Reddit or local meet‑ups to stay updated on regulatory tweaks.