By Staff Reporter
ISLAMABAD: Pakistan’s virtual assets regulator warned financial institutions on Monday that any agreement, memorandum of understanding or pilot program involving virtual assets — including stablecoins used for remittances and cross-border payments — requires its explicit prior authorisation.
The advisory from the Pakistan Virtual Assets Regulatory Authority (PVARA), comes barely three weeks after the State Bank of Pakistan enacted the Virtual Assets Act 2026. That legislation marked a sharp policy reversal by the central bank, legalising virtual asset activities and actively encouraging their use in the country’s financial system.
Under the new law, PVARA was designated as the sole statutory body responsible for licensing, regulating, supervising and overseeing all virtual asset services in Pakistan. These services include the issuance, transfer, custody, exchange or facilitation of virtual assets, stablecoins and related blockchain-based solutions. In the advisory published on Monday, PVARA said it had taken note of a string of recent public announcements by financial institutions detailing partnerships, memoranda of understanding and pilot projects in the virtual asset space.
“Under the Virtual Assets Act, 2026, the provision of virtual asset services to users in Pakistan, including the issuance, transfer, custody, exchange, or arrangement of virtual assets, stablecoins, and allied blockchain-based solutions, falls within the regulatory ambit of PVARA,” the authority said. “Any agreement or announced pilot that results in, or directly enables, the provision of such services requires prior authorisation from PVARA.”
The regulator went further, cautioning that public announcements made without first engaging with the authority could trigger regulatory, reputational and compliance risks, including potential violations of standards set by the Financial Action Task Force, or FATF. Such moves, it said, might mean the proposed activities “not lawfully proceed.” PVARA stressed that it remains committed to fostering “responsible innovation” in the sector. It urged any individual or entity — whether a natural person or a legal entity — planning virtual asset pilots, stablecoin use cases, blockchain-based solutions or tokenization structures to engage with the regulator at an early stage.
The recommended channels include PVARA’s regulatory sandbox, applications for no-action relief letters or the no-objection certificate process, followed by formal prior authorisation. The advisory effectively draws a bright line around the rapid enthusiasm that followed the passage of the Virtual Assets Act. While the central bank’s move was widely viewed as a green light for experimentation in a country long constrained by strict foreign-exchange and payment rules, PVARA’s intervention signals that the regulatory perimeter is firmly in place and will be enforced from the outset. No specific institutions were named in the advisory, and PVARA did not disclose whether any of the recently announced initiatives had already sought or received its approval. The statement did not set a deadline for existing announcements to be regularized.
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