Latest news with #PVARA
The Print
11-07-2025
- Business
- The Print
Crypto, crisis & the Trump connection: All about Pakistan's new Virtual Assets Act
The passage of this legislation follows the State Bank of Pakistan's ongoing preparations for launching a central bank digital currency (CBDC). SBP Governor Jameel Ahmad, speaking at the Reuters NEXT Asia summit in Singapore Wednesday, confirmed the bank is working with global tech partners and is in the final stages of drafting supporting legislation. 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
Arab News
11-07-2025
- Business
- Arab News
Pakistan to complete pilot project for digital currency rollout by June next year
KARACHI: Pakistan's central bank plans to complete a pilot project for a digital currency in the ongoing fiscal year, its spokesperson said on Friday, as the country takes cautious steps toward embracing blockchain-based payments while tightening oversight of its virtual asset economy. The pilot announcement follows the establishment of the Pakistan Virtual Assets Regulatory Authority (PVARA) through a presidential ordinance earlier this week. The law empowers the authority to regulate the country's growing crypto market, crack down on money laundering and terror financing, and promote responsible innovation — a move analysts say could bring an estimated $25 billion in virtual assets into the tax net. 'We hope to complete the pilot within the current fiscal year [ending June 30, 2026],' Noor Ahmed of the State Bank of Pakistan (SBP) told Arab News when asked about the rollout timeline. 'Tech partner and other details will be announced in due course.' Shankar Talreja, head of research at Topline Securities, said it was too early to say who would use the digital currency, since a pilot was still being launched, though he said it could benefit most bank account holders. 'Since this would be backed up [by the] central bank, so existing digital payment users can use this for payments,' he said. 'The challenge would be if merchants accept this initially.' The South Asian nation had long remained under scrutiny for weak financial controls and was only removed from the Financial Action Task Force's (FATF) 'grey list' in 2022. The creation of PVARA is seen as part of Islamabad's broader effort to cautiously formalize the virtual asset space. 'The legality of digital assets has been a grey area in Pakistan in the recent past from a practical standpoint,' said Nayab Babar, the chief investment officer at the Prime Minister's Pakistan Startup Fund. 'Creation of the crypto council is an extremely important development which gives confidence to consumers and corporates alike, that there is a way forward to legally participate in this booming asset class without fear of losing money,' he added. Farrukh H. Khan, the chief financial officer at Jazz, Pakistan's largest digital operator and a unit of global telecom giant VEON, also welcomed the new regulatory measures. 'It is the right approach that we pilot it and cautiously move forward,' he said while pointing out the government's decision would help document Pakistan's 'very large' base of crypto investors. 'According to Binance, which is one of the largest [digital] trading platforms, about 15 million Pakistanis are registered on their platform,' he said. To integrate digital assets into the economy, the government earlier launched the Pakistan Crypto Council (PCC) in March and later appointed Binance founder Changpeng Zhao as a strategic adviser. The move has been welcomed by retail traders like Muhammad Huzaifa, who said the lack of legal cover had previously left crypto investors vulnerable. 'Sometimes few government institutions like the FIA [Federal Investigation Agency] freeze the bank accounts of traders,' said the 33-year-old. 'These laws will lend more freedom and space for traders as they can buy, sell and invest in crypto easily without any fear,' he added. Asked about his digital holdings, he said he was managing multiple accounts 'between $50,000 to $100,000.' Farhan Hassan, the chief digital officer at Easypaisa Digital Bank (eDB) with over 50 million users, praised the creation of PVARA as a key step toward safer adoption. 'Pakistan has long been poised for broader crypto and blockchain adoption, but it lacked the regulatory clarity to unlock its full potential,' he said. 'This landmark development sets the foundation for a secure, transparent and regulated framework to guide the growth of virtual assets in Pakistan.' Hassan added that eDB was 'uniquely positioned' to collaborate with regulators in piloting, testing, and scaling financial solutions aligned with both global standards and local needs. CHALLENGES Still, analysts caution that implementation could be challenging due to the government's institutional capacity. 'The regulators may lack technical capacity and real-time monitoring tools to fully oversee crypto markets,' said Muhammad Waqas Ghani, head of research at Karachi-based JS Global Capital. He maintained that Pakistan's stock market was a more regulated and secure investment option, offering greater protection against fraud and manipulation compared to the still-evolving crypto space. Pakistan may also require the International Monetary Fund's approval if it plans to subsidize electricity for future crypto mining and AI data centers. '[The IMF] staff reiterated the importance of maintaining a level playing field for all private sector participants and will continue to engage with the authorities on this as appropriate as plans develop further,' Mahir Binici, the IMF's resident representative in Pakistan, said this week. Talal Ahmad, an official from the office of State Minister on Blockchain and Crypto Bilal Bin Saqib, did not provide any details in response to Arab News queries. 'A lot of these questions don't have answers at the moment. Could you wait until we pass the regulation law [from parliament]?' he said. Asked who would be the first users of Pakistan's digital currency, SBP's Ahmed said the central bank would share such details at a later stage. Pakistan's push follows the example of countries like India, which launched a pilot e-rupee in 2022. The Reserve Bank of India initially allowed selected banks to use it for settling secondary-market transactions in government securities before extending it to the retail sector.
Memri
09-07-2025
- Business
- Memri
How Crypto Chaos In Pakistan Threatens National Security And Economic Stability
On July 8, 2025, the Pakistan government announced the establishment of the Pakistan Virtual Assets Regulatory Authority (PVARA). According to the media, this body would operate as an "independent regulator for licencing, monitoring and supervising virtual asset service providers (Vasp), ensuring alignment with the Financial Action Task Force (FATF) guidelines and international best practices."[1] Yet, Pakistan's sudden embrace of cryptocurrency represents a dangerous confluence of geopolitical opportunism and regulatory recklessness that could transform the country into a global hub for illicit financial flows. While the Trump administration's crypto-friendly policies have opened new diplomatic channels, Pakistan's hasty pivot toward digital assets without proper legal frameworks threatens to exacerbate existing challenges with terror financing and money-laundering compliance.[2] The most glaring contradiction in Pakistan's cryptocurrency strategy lies in its fundamental illegality within the country's own borders. Despite establishing the Pakistan Crypto Council and appointing Bilal bin Saqib as its CEO with ministerial status, cryptocurrency transactions remain prohibited under current Pakistani law.[3] Finance Secretary Imdad Ullah Bosal's categorical statement that "crypto is not a legal tender in Pakistan" exposes the nature of government policy, where officials simultaneously promote Bitcoin initiatives abroad while maintaining domestic prohibitions. This regulatory chaos becomes particularly troubling when examined through the lens of Pakistan's appointment of Changpeng Zhao as strategic adviser to its crypto council.[4] Zhao, the Chinese-born Canadian co-founder and former CEO of Binance, pleaded guilty to failing to implement proper anti-money-laundering standards and served time in US prison.[5] Binance was found to have facilitated transactions for sanctioned entities including Hamas,[6] resulting in a $4.3 billion settlement.[7] Pakistan's decision to elevate such a controversial figure to guide its cryptocurrency strategy sends alarming signals about the country's commitment to financial integrity and counter-terrorism compliance. Pakistan's Vulnerability To Terror Financing Through Cryptocurrency The timing of Pakistan's crypto enthusiasm coincides suspiciously with the Trump administration's dismantling of cryptocurrency enforcement mechanisms. The closure of the Consumer Financial Protection Bureau, which had previously scrutinized crypto companies for fraud and risks, has created a regulatory vacuum that Pakistan appears eager to exploit. This alignment with Trump's deregulation agenda suggests Pakistan's cryptocurrency push is less about genuine economic development and more about currying favor with an administration that has significant business interests in the digital asset space. Pakistan's vulnerability to terror financing through cryptocurrency channels becomes even more pronounced given the country's existing struggles with Financial Action Task Force compliance. The FATF has repeatedly placed Pakistan on its grey list for inadequate measures against money laundering and terror financing. The introduction of cryptocurrency infrastructure without robust regulatory frameworks could provide terrorist organizations with sophisticated new channels for moving funds while maintaining plausible deniability about their origins and destinations. The technical requirements for FATF compliance in cryptocurrency transactions present particular challenges for Pakistan. The travel rule mandates that companies must provide complete transaction data from origin to beneficiary for up to five years. This requirement necessitates extensive data storage capabilities and uninterrupted electricity supply, resources that Pakistan struggles to provide even for basic economic needs. The country's allocation of 2,000 megawatts of electricity for Bitcoin mining, announced without IMF consultation, highlights the disconnect between cryptocurrency ambitions and economic realities. Pakistan's attempt to mirror US stablecoin legislation through the GENIUS Bill framework reveals the extent to which American business interests are driving Pakistani policy. The bill's requirement that trading partners maintain similar regulatory structures creates a dependency relationship where Pakistan must align its financial regulations with US preferences to maintain access to dollar-pegged stablecoin markets. This arrangement effectively subordinates Pakistani monetary sovereignty to American commercial interests while potentially exposing the country to new forms of financial instability. Pakistan's Domestic Cryptocurrency Prohibitions Pakistan's strategic Bitcoin reserve announcement at the Las Vegas conference represents perhaps the most reckless aspect of its cryptocurrency gamble. Establishing sovereign cryptocurrency holdings without proper legal frameworks or risk assessment mechanisms exposes the national treasury to extreme volatility while potentially facilitating capital flight. The contradiction between promoting Bitcoin reserves internationally while maintaining domestic cryptocurrency prohibitions creates legal and operational uncertainties that could undermine both initiatives. The International Monetary Fund's concerns about Pakistan's cryptocurrency initiatives reflect broader international skepticism about the country's approach. With Pakistan already dependent on IMF bailout packages and facing stringent conditionality requirements, the unilateral decision to allocate significant resources to cryptocurrency infrastructure without consultation represents a direct challenge to multilateral oversight mechanisms. This defiance could complicate future negotiations and potentially jeopardize essential financial support. The precedent of El Salvador, where President Nayib Bukele invested 15 percent of GDP in Bitcoin despite IMF objections, provides a troubling model for Pakistan's strategy.[8] While Bukele ultimately secured continued IMF funding with Trump administration support, his country's extreme cryptocurrency exposure has created unprecedented fiscal vulnerabilities. Pakistan's adoption of a similar approach, given its far more precarious economic position and complex security challenges, represents an exponentially greater risk. Pakistan Risks Transforming Itself Into A Haven For Illicit Financial Flows The emergence of what could be termed "cryptoplacy" as a new form of diplomatic engagement creates particular dangers for countries like Pakistan with weak institutional frameworks. The ability to gain political access and potentially circumvent traditional oversight mechanisms through cryptocurrency initiatives may prove irresistible to governments seeking international legitimacy, even when such approaches fundamentally undermine domestic stability and security. Pakistan's cryptocurrency gamble ultimately reflects a broader pattern of prioritizing short-term political gains over long-term institutional development. By embracing digital assets without adequate legal frameworks, appointing compromised individuals to key positions, and aligning financial policy with foreign business interests, Pakistan risks transforming itself into a haven for illicit financial flows while exposing its fragile economy to unnecessary volatility and external manipulation. The country's leaders must recognize that sustainable economic development requires robust institutions and regulatory clarity, not opportunistic alignment with the latest international trends.
Arab News
09-07-2025
- Business
- Arab News
Pakistan enacts landmark law to regulate virtual assets, plans pilot for digital currency
KARACHI: Pakistan has formally enacted its first law to regulate virtual assets, establishing a federal authority to license and oversee crypto-related businesses, the finance ministry said on Wednesday, as the country joins a growing list of nations adopting formal oversight of blockchain-based finance. The Virtual Assets Act, 2025 creates the Pakistan Virtual Asset Regulatory Authority (PVARA), a new autonomous regulator to supervise the virtual asset economy, ensure compliance with global anti-money laundering standards and support financial innovation through regulatory sandboxes. Pakistan's move aligns with similar frameworks adopted by global peers such as the United Arab Emirates, Singapore, India, and the European Union, where regulators have introduced crypto-specific licensing, centralized oversight authorities, and pilot programs for central bank digital currencies (CBDCs). The State Bank of Pakistan has also separately announced it is preparing to launch a pilot for a digital rupee, marking a broader shift toward digital modernization of Pakistan's financial system. 'The Authority has been granted comprehensive powers to ensure transparency, compliance, financial integrity, and the prevention of illicit activities, in alignment with international standards including those of the Financial Action Task Force (FATF),' the finance ministry said, describing the powers of the new regulator set up under the Virtual Assets Act. Separately, speaking at the Reuters NEXT Asia summit in Singapore on Wednesday, Governor State Bank Jameel Ahmad said the new law would 'lay down the foundations for the licensing and regulation' of the virtual assets sector and that the central bank was already in touch with some tech partners. He said a legal framework for virtual assets was necessary to 'evaluate and manage the risk very carefully, and at the same time not allow to let go the opportunity.' In May, the State Bank clarified that virtual assets were not illegal but advised financial institutions not to engage with them until a formal licensing framework was in place. NEW POWERS The new regulator will introduce a structured licensing regime for all firms offering services related to cryptocurrencies, digital tokens and blockchain-based assets in or from Pakistan. These entities must meet operational and compliance standards and will be subject to ongoing reporting obligations. The law gives PVARA powers to combat illicit finance and enforce transparency in line with the FATF framework, a key benchmark for Pakistan, which was removed from the FATF grey list in 2022 after significant reforms. The regulator's governing board will include top officials from Pakistan's economic and regulatory institutions: the governor of the State Bank of Pakistan, secretaries of finance, law, IT and telecom, as well as the chairpersons of the Securities and Exchange Commission of Pakistan, the Federal Board of Revenue and the Digital Pakistan Authority. Two independent directors with expertise in law, technology, or finance will also be appointed by the federal government. The chairperson of the Authority, who will lead PVARA's operations, is to be selected based on 'demonstrated experience in finance, law, technology, or regulatory affairs,' according to the statement. In a nod to Pakistan's Islamic financial system, the law mandates the creation of a Shariah Advisory Committee to advise PVARA on the religious permissibility of virtual asset products and services. Any licensed firm offering Shariah-compliant services must adhere to this committee's rulings. To handle disputes, the law also establishes a Virtual Assets Appellate Tribunal, which will operate independently and include experts in law, finance, and technology to hear appeals against regulatory decisions. The legislation provides space for responsible innovation by allowing startups and developers to test blockchain-based products within a regulatory sandbox, a controlled environment supervised by PVARA. The authority may also issue no-action letters, temporarily exempting experimental projects from certain rules under defined conditions. DIGITAL RUPEE The enactment of the new law builds on recent crypto-focused developments in Pakistan. In March 2025, the government-backed Pakistan Crypto Council (PCC) was launched to support blockchain and virtual asset adoption. It has already initiated conversations with global crypto firms and plans to explore bitcoin mining using surplus energy. It has also appointed Binance founder Changpeng Zhao as a strategic adviser and plans to establish a state-run bitcoin reserve. It has also held talks with US-based crypto firms, including the Trump-linked World Liberty Financial. Meanwhile, the State Bank of Pakistan is preparing a pilot project for a digital rupee, Governor Ahmad said while speaking at the Reuters NEXT Asia summit. Pakistan was 'building up our capacity on the central bank digital currency' and hoped to roll out a pilot soon, Ahmad said. With inputs from Reuters
Business Recorder
09-07-2025
- Business
- Business Recorder
President Zardari gives assent to Virtual Assets Act, 2025
Following endorsements from the Federal Cabinet, President Asif Ali Zardari has given his assent to the 'Virtual Assets Act, 2025'. The law establishes the Pakistan Virtual Asset Regulatory Authority (PVARA), an autonomous federal body empowered to license, regulate, and supervise entities dealing in virtual assets, read a statement. On Monday, the Federal Cabinet formally approved the summary for the creation of PVARA, a landmark step towards establishing a comprehensive legal and institutional framework for overseeing the country's rapidly growing digital assets ecosystem. The authority has been granted comprehensive powers to ensure transparency, compliance, financial integrity, and the prevention of illicit activities, in alignment with international standards including those of the Financial Action Task Force (FATF). As per the statement, the board of the authority will include key government stakeholders, such as the Governor of the State Bank of Pakistan (SBP), secretaries of finance, law and justice, and information technology and telecommunications, as well as the chairpersons of the Securities and Exchange Commission of Pakistan (SECP), the Federal Board of Revenue (FBR), and the Digital Pakistan Authority. Moreover, two independent directors with expertise in virtual assets, law, finance, or technology will be appointed by the federal government. The chairperson, appointed on the basis of demonstrated experience in finance, law, technology, or regulatory affairs, will oversee the authority's functions. Under the Act, any person or company intending to offer virtual asset services in or from Pakistan must be licensed by the authority. 'A structured licensing regime will be introduced, with specific requirements for incorporation, operational capacity, compliance frameworks, and reporting obligations,' it said. The legislation also incorporates a framework for 'responsible innovation by establishing a regulatory sandbox, allowing emerging technologies and business models to be tested under supervisory oversight'. In addition, the authority may issue no-action relief letters under defined conditions to facilitate experimentation while preserving regulatory accountability. Moreover, to ensure compatibility with Islamic finance principles, the law mandates the formation of a Shariah Advisory Committee, which will advise the authority on matters related to the Shariah compliance of virtual asset products and services. Licensed entities offering Islamic financial products will be bound by the rulings issued by the committee. The Act also provides for the establishment of a virtual assets appellate tribunal to hear appeals against regulatory decisions. The tribunal will function with judicial independence and a specialised bench comprising experts in law, finance, and technology.
