By Safi Ghauri, Managing Partner, Esquare Legal · 24 May 2026
On 4 March 2026, Pakistan’s National Assembly passed the Virtual Assets Act, 2026 into permanent law. If you run a global exchange, a stablecoin platform, or a custody operation with any exposure to Pakistani users, that date matters more than most compliance calendars have registered.
Pakistan is not a minor frontier market. It has approximately 27 million active cryptocurrency users — third globally by user count behind only the United States and India — and processes an estimated USD 25 billion in crypto transactions annually. The country receives over USD 30 billion in formal remittances each year, with the UAE-Pakistan corridor being the single largest component, and a meaningful share of that flow already moves through crypto rails. The market exists and is large. What has changed is that operating in it without a licence is now a criminal offence.
What the Act Actually Does
The Virtual Assets Act, 2026 establishes PVARA — the Pakistan Virtual Assets Regulatory Authority — as a permanent federal regulator with statutory enforcement powers. It replaces the Virtual Assets Ordinance promulgated in July 2025, converting a temporary executive measure into primary legislation with parliamentary backing.
The practical effect for international operators is unambiguous. Any exchange, custodian, stablecoin issuer, or token distribution platform providing services to persons in Pakistan — regardless of where the platform is incorporated — is within scope. A Singapore-licensed exchange whose Pakistani users can register, deposit, and trade is providing services in Pakistan. A UAE-licensed custodian holding assets for Pakistani clients is within scope. The jurisdictional reach is functional, not territorial.
Operating without a PVARA licence now carries criminal penalties: fines of up to PKR 50 million (approximately USD 180,000) and imprisonment of up to five years for unlicensed VASP activity. Unauthorised token offerings carry separate penalties of up to PKR 25 million and three years’ imprisonment. These are not nominal civil penalties — they are criminal exposure that compliance officers at global exchanges need to treat seriously.
Who Has Already Moved
The signal from the market’s early movers is instructive. Binance and HTX both received No Objection Certificates from PVARA in December 2025 and have entered formal licensing processes. Two of the world’s top-five exchanges by volume have decided Pakistan is worth the licensing investment. The competitive implication for Tier-2 and Tier-3 exchanges is straightforward: the Pakistani market will have licensed incumbents within the next six to twelve months. Operators who have not started the NOC process are not making a neutral decision — they are ceding ground.
The Licensing Window and Why Timing Matters
The PVARA licensing pathway runs in two stages. The first is the No Objection Certificate, which requires prior regulatory recognition from a major jurisdiction (UAE, EU, Singapore, US, or comparable), a detailed Pakistani business plan, full beneficial ownership disclosure, and AML/CFT documentation calibrated to Pakistani risk typologies. The second is the operational licence, which assesses the technology stack, custody arrangements, and in-country compliance infrastructure.
Total timeline for a well-prepared applicant with existing regulatory authorisation: seven to ten months from NOC submission to operational licence. That means exchanges starting the process today are looking at a Q1 or Q2 2027 operational date — which coincides with the period when the first-cohort licensees will be consolidating market position.
The early-mover advantages are concrete. PVARA is a new regulator processing its first licensing cohort. Case officers are engaged, capital floor flexibility exists for licence categories where thresholds are not yet standardised, and Special Virtual Asset Zone consultations are open to foundational participants. These advantages compress as the regulator matures. The window is not permanently open.
The Shariah Dimension
One feature of the PVARA regime that distinguishes Pakistan from every other major crypto licensing jurisdiction is the statutory Shariah Advisory Committee, mandated under Section 7 of the Act. Products marketed in Pakistan as Shariah-compliant require Committee endorsement before they can be offered. For operators with existing Shariah governance — AAOIFI alignment, a board-level Shariah committee, or an independent audit programme — this is a manageable additional step. For operators without it, the Committee review adds complexity that needs to be planned for, not discovered during the application process.
For stablecoin issuers and yield product operators in particular, the interest-bearing and leverage-related products that are commercially standard in other jurisdictions face substantive Shariah scrutiny in Pakistan. This is not a peripheral compliance note — it is a product design consideration that shapes which offerings are viable in the market.
What Operators Should Do Now
The most important first step is a structured assessment of whether your current regulatory authorisation satisfies PVARA’s threshold qualification and what your Pakistani operational model looks like. These questions are not complicated but they require Pakistani regulatory expertise alongside your existing compliance infrastructure — PVARA’s requirements are specific to Pakistan and do not reduce to a recognition exercise on a foreign licence.
Esquare Legal advises global exchanges, custodians, and token issuers on PVARA licensing from a registered Pakistani entity with a team of eight Pakistani-licensed associates. Our managing partner holds regulatory experience across VARA (UAE), CBB (Bahrain), BCB (Brazil), and licensing authorities in Indonesia, Malaysia, the BVI, and the Cayman Islands. We are also Registered Partners of Tahota Law Firm for clients operating on the China–Pakistan corridor.
For a full breakdown of the NOC process, capital requirements, AML obligations, the Shariah Advisory Committee, and the Pakistan–UAE, China, and Singapore corridors, read our complete PVARA licensing guide. For an overview of our Pakistan virtual asset practice, visit our crypto lawyer Pakistan page.
To discuss your PVARA licensing strategy, contact us at safighauri@esquarelegal.com with the subject line “PVARA Licensing Enquiry.”
This article reflects the state of Pakistani virtual asset regulation as of May 2026 and is general legal information, not legal advice. Clients should obtain specific advice on their circumstances before taking any action in reliance on the content herein.