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ISLAMABAD: In a groundbreaking development, the State Bank of Pakistan (SBP) has announced its decision to legalize virtual assets and introduce a central bank-backed digital currency under the proposed Virtual Asset Bill 2025. The move, seen as a major step toward modernizing Pakistan’s financial ecosystem, was revealed during a briefing to the Senate Finance Committee chaired by Senator Saleem Mandviwalla.
SBP Deputy Governor Dr. Inayat Hussain confirmed that the existing advisory declaring cryptocurrency illegal will be withdrawn, paving the way for a comprehensive regulatory framework for virtual assets. He said that the central bank is working to launch a “digital rupee”, which will be issued exclusively by SBP and serve as a regulated mechanism for virtual asset transactions across Pakistan.
Pakistan’s $21 Billion Investment in Crypto
Senator Afnanullah Khan, while addressing the committee, disclosed that Pakistanis have already invested around $21 billion in cryptocurrencies, reflecting the urgent need for regulation. “The absence of a legal and secure framework has forced millions of Pakistanis to rely on informal or foreign channels for crypto trading,” he added.
The new legal framework aims to provide a secure avenue for such investments, ensuring both investor protection and compliance with international standards.
Virtual Asset Bill 2025: Key Provisions
The proposed Virtual Asset Bill 2025 will apply nationwide and seeks to create a strong regulatory structure for virtual assets. According to the Ministry of Law and Justice consultant, the bill outlines the establishment of a Virtual Asset Regulatory Authority (VARA).
This authority will be responsible for:
- Licensing service providers and exchanges
- Implementing regulations
- Monitoring transactions
- Ensuring investor protection
Barrister Syed Shehroze, while briefing the committee, explained that virtual assets will be transferable and usable across Pakistan, but they cannot be used for direct payments for goods, services, or investments outside the regulated ecosystem.
Safeguards for Investors
To address concerns of misuse, the bill introduces robust safeguards aligned with FATF (Financial Action Task Force) requirements, as well as anti-money laundering (AML) and counter-terrorism financing (CTF) standards.
The central bank is also collaborating with technology vendors to develop the infrastructure for the digital rupee. Dedicated offices will be set up nationwide to facilitate transactions in virtual assets.
Dr. Inayat Hussain added that a framework is being designed to allow the sale of virtual assets abroad, ensuring compliance with global standards.
Structure of the Virtual Asset Regulatory Authority
The proposed VARA will be established under Section 6 of the upcoming ordinance. Its governing board will include:
- Governor of the State Bank (Chair)
- Secretaries of Finance, Law, and IT
- Chairpersons of SECP, FBR, and Digital Pakistan
- Director General FIA
The Senate Finance Committee recommended further inclusions, such as a Member of the National Assembly and a Senator on the board.
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Moreover, the committee suggested that the Chairman of the authority should have at least five years of experience and not exceed 55 years of age. However, an exemption may apply for a second term.
Debate Over Transaction Limits and Fees
The Senate session also witnessed debates on transaction limits. While a proposed $10,000 cap per transaction was under discussion, several members, including Senator Mohsin Aziz, opposed it, stating, “There should be no threshold limit.”
Senator Afnanullah suggested imposing a percentage-based fee on service providers and exchanges as a revenue model for the authority.
Concerns Over Data Privacy and Insider Trading
Another key issue raised was data privacy. Senator Afnanullah emphasized that service providers must be held accountable for protecting user data. He warned that any leakage of sensitive information could lead to misuse and manipulation of market trends.
To prevent insider trading, the committee proposed barring board members from sharing policy-level information or engaging in trading themselves. Furthermore, they will be restricted from benefiting indirectly through family members.
Funding and Independence of the Authority
Initially, the Virtual Asset Regulatory Authority will be funded by the Government of Pakistan. Over time, it will generate its own revenue through licensing fees, penalties, and other charges.
The Ministry of Law and Justice consultant stressed that the authority will operate independently, ensuring a secure and transparent environment for virtual assets.
Way Forward
The Senate Finance Committee welcomed SBP’s initiative but deferred further discussions until its next meeting. Lawmakers agreed that the Virtual Asset Bill 2025 marks a crucial step in modernizing Pakistan’s financial system while safeguarding investors and complying with international obligations.
If successfully implemented, the legalization of virtual assets and the launch of a central bank-backed digital rupee could open new doors for financial inclusion, foreign investment, and technological innovation in Pakistan.
