Crypto, crisis & the Trump connection: All about Pakistan's new Virtual Assets Act
The law, endorsed by Pakistan's President, Prime Minister and the Federal Cabinet, aims to bring structure and legitimacy to the sector. The Act mandates that any individual or company offering virtual asset services within or from Pakistan must be licensed by the Authority, which will oversee incorporation, compliance, reporting, and consumer protections.
New Delhi: Months after tying up with a Trump-linked crypto firm, Pakistan passed the Virtual Assets Act, 2025 Wednesday, formally approving the establishment of an autonomous federal watchdog, the Pakistan Virtual Asset Regulatory Authority (PVARA). This will now oversee digital assets amid economic challenges and rising crypto adoption.
This newly created PVARA will have broad oversight powers and include on its board a collection of key government figures: The Governor of the State Bank of Pakistan (SBP), secretaries from the ministries of Finance, Law, and IT, and chairs of regulatory bodies like SECP, FBR, and the Digital Pakistan Authority. Two independent experts and a Chairperson with a proven track record in finance, tech, or regulatory affairs will round off the leadership.
Also read: Why is Pakistan going all out on crypto? There's a Donald Trump angle
What's in the law?
Beyond licensing, the law establishes a regulatory sandbox to allow innovation within tightly supervised conditions. A regulatory sandbox is a controlled setting that allows financial service providers to experiment with innovative products and services involving real customers, while operating under eased regulatory requirements.
The law also introduces 'no-action relief letters,' offering startups room to experiment without triggering enforcement, provided they remain within certain parameters. A Virtual Assets Appellate Tribunal will hear appeals, staffed by legal, financial, and technical specialists to ensure judicial independence.
The law reportedly aligns with global best practices, including those from the Financial Action Task Force (FATF), and requires compliance with Islamic finance principles. A Shariah Advisory Committee will guide the regulatory authority on whether certain virtual assets meet religious compliance standards.
While the law reflects an internal push to regulate a booming grassroots crypto market, where an estimated 20 million Pakistanis are already participating, it also comes with geopolitical undercurrents. In recent months, Islamabad has sought partnerships with US-based crypto firms linked to Donald Trump's inner circle.
The Trump connection
In April, World Liberty Financial (WLF), a firm reportedly connected to Trump's family, committed to helping Pakistan build blockchain infrastructure and tokenise public assets. At the same time, Texas-based Fr8Tech pledged up to $20 million to purchase $TRUMP, a Trump-linked cryptocurrency, and offered to support Pakistan's blockchain development through WLF.
Though the details of these partnerships remain opaque, their timing suggests Pakistan is attempting to curry favour with political players in Washington, possibly as part of a broader diplomatic balancing act in a polarised global environment.
In May, the State Bank of Pakistan clarified that virtual assets are not illegal but cautioned financial institutions against engaging with them until a formal licensing system is established.
Sceptics question whether Pakistan can afford this digital transformation. Despite some recent economic recovery, including a drop in inflation to 3.2% in June 2025, which is the lowest in nine years, the country remains economically constrained. The central bank's policy rate, once at a record 22%, has only recently eased to 11%. Pakistan's foreign exchange reserves, now at $14.5 billion, are an improvement from the crisis levels of two years ago, but the road ahead remains uncertain.
Meanwhile, concerns about IMF disapproval persist. In May, reports claimed the International Monetary Fund had rejected Islamabad's plans to allocate 2,000 megawatts of electricity toward Bitcoin mining and AI data centres. While both the IMF and Pakistan's Power Division have denied these claims, the initiative has drawn scrutiny, especially amid ongoing IMF structural reforms under a $7 billion programme set to run until September 2027.
Critics liken the crypto push to the Special Investment Facilitation Council (SIFC), a controversial economic body dominated by military officials, established in 2023 to draw foreign capital. With 36 active-duty officers reportedly involved, many worry the same elite forces may now dominate Pakistan's nascent digital asset landscape.
Pakistan's push into digital finance comes amid limited fiscal space, a military-dominated investment landscape, and recent concerns from the IMF about energy allocation to bitcoin mining. In May, Pakistan's Finance Ministry earmarked 2,000 MW of electricity for bitcoin mining and AI data centers in a move that raised eyebrows in global financial circles.
While both Pakistan's Power Division and the IMF later denied any formal objection, the episode reflects how delicately Pakistan must tread.
Still, SBP Governor Ahmad remains optimistic. 'We are confident that after this IMF programme, we may not require an immediate follow-up,' he said.
Money, IMF Pressure & crypto ambitions
Pakistan's Metaverse Virtual Assets market is quietly booming. Fueled by a young, tech-savvy population, widespread smartphone adoption, and rapid internet penetration, digital assets, from NFTs to virtual real estate, are seeing a surging demand.
The numbers back the trend. According to a Statista 2025 report, the sector is projected to reach a value of US$17.3 million in 2025, with an explosive annual growth rate of 43.89%, booming to US$106.7 million by 2030. By then, the number of users in Pakistan's Metaverse Virtual Assets market is expected to reach 8,24,700, with an average revenue per user (ARPU) of US$24.6.
Globally, the US is expected to dominate with a market volume of US$1.3 billion in 2025, but Pakistan's rapid growth stands out given its macroeconomic constraints. Locally, the boom is being driven not just by speculation, but by changing consumer habits, the gamification of digital life, and increasing access to affordable AR/VR technology.
A 2021 strategic analysis by Pakistan's Financial Monitoring Unit (FMU) had found that virtual assets pose a significant risk for money laundering and terrorism financing due to their anonymous, decentralised nature. Between January 2020 and June 2021, FMU received 447 suspicious transaction reports involving PKR 701.9 million. Most users were young IT professionals and salaried individuals using bank accounts, cards, and informal channels. The analysis linked virtual asset use to crimes such as terrorism financing, fraud, drug trafficking, and tax evasion.
(Edited by Viny Mishra)
Also read: Jaishankar's laser eyes meme hides how India blinded itself on crypto
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