The newly drafted Pakistan virtual asset regulations mark the most comprehensive effort yet to govern the country’s fast-growing digital asset ecosystem. As Pakistan moves to strengthen financial integrity and align with global standards, these regulations introduce strict compliance requirements for Virtual Asset Service Providers (VASPs), reshaping how crypto and blockchain-related businesses can operate in the country.
Mandatory Verification for High-Value Transactions
Under the Pakistan virtual asset regulations, every virtual asset transfer exceeding Rs. 1 million will require VASPs to obtain, verify, and maintain detailed information on both the originator and the beneficiary. This data must be made available to authorities whenever requested, ensuring transparency in large-value crypto transfers.
This mandate reflects Pakistan’s efforts to improve monitoring of digital transactions and meet international anti-money-laundering (AML) and counter-terror-financing (CTF) expectations. The government has made full compliance with the FATF Travel Rule compulsory, embedding high levels of financial traceability across the virtual asset space.
A Comprehensive Framework for All Digital Asset Activities
The Pakistan virtual asset regulations extend far beyond transaction monitoring. They introduce a wide-ranging operational framework covering nearly every activity involving virtual assets, including:
- Brokerage
- Custody services
- Exchange operations
- Lending and borrowing
- Derivatives trading
- Asset management
- Token issuance
- Settlement and clearing services
This means that any business dealing in virtual assets must align with clear rules designed to prevent market manipulation, fraudulent schemes, and system abuse. Blockchain analytics and monitoring tools will now be essential for all licensed VASPs to track activity and identify suspicious behavior.
Stricter Due Diligence and Wallet Monitoring
According to the Pakistan virtual asset regulations, enhanced due diligence is no longer optional—especially when dealing with foreign entities, unhosted wallets, or anonymity-enhanced transactions. These areas have traditionally been weak points in global digital asset compliance, and Pakistan is now tightening its oversight to eliminate loopholes that criminals could exploit.
VASPs must also adopt measures to evaluate and continuously verify high-risk users and counterparties, ensuring complete transparency throughout the transaction chain.
Governance, Transparency, and Board Requirements
A significant portion of the Pakistan virtual asset regulations focuses on corporate governance. Companies must be transparent about ownership structures and provide regulators with a clear chain of control, identifying all ultimate beneficial owners.
Key requirements include:
- Prior approval for changes in ownership or governance
- Board members meeting “Fit and Proper Person” criteria
- Annual board and committee performance evaluations
- Maintenance of conflict-of-interest registers
- Mandatory conflict disclosures and recusals
All statutory information must be accessible to the public, enabling shareholders and stakeholders to remain informed about the governance and financial health of VASPs.
Financial Resilience and Security Deposits
To ensure financial stability, the Pakistan virtual asset regulations require VASPs to maintain paid-up capital for every licensed activity they undertake. Additionally, 30% of this capital must be deposited as security with the State Bank of Pakistan. This deposit will only be refunded once the business formally closes operations and clears all liabilities.
This requirement strengthens the financial backbone of the virtual asset sector and protects consumer funds by ensuring that only serious, well-capitalized entities operate in the market.
Cross-Border Outsourcing With Conditions
Cross-border outsourcing will remain permitted under the new rules, but only if it does not hinder regulatory access to data or disrupt supervisory oversight. VASPs must maintain contingency plans so that core functions can be brought back in-house or shifted to alternative providers without system failures or consumer impact.
Cybersecurity Becomes the Most Regulated Domain
Perhaps the most robust part of the Pakistan virtual asset regulations lies in cybersecurity. Each VASP must have an Authority-approved Cybersecurity Policy, reviewed and updated annually. This policy will cover nearly every aspect of digital protection, including:
- Access controls and employee vetting
- Smart-contract audits
- Client authentication systems
- Real-time system monitoring
- Incident response strategies
- Vendor risk assessments
- Protection against ransomware and cyberattacks
Continuous testing, stress simulations, and IT audits will be mandatory, ensuring digital asset platforms remain resilient in an environment of rapidly evolving cyber threats.
The Pakistan virtual asset regulations represent a major leap toward establishing a secure, transparent, and globally compliant digital asset ecosystem. By imposing strict verification rules, enhancing governance, and strengthening cybersecurity standards, Pakistan is signaling its commitment to responsible innovation. As VASPs adapt to this new regulatory landscape, the country is poised to create a safer environment for digital transactions, protect investors, and align with international financial norms.
