Pakistan's VASP licensing moves from statute to supervision
Pakistan has spent the past year building the legal shell for virtual assets. The Virtual Assets Act 2026 created a statutory framework and gave the Pakistan Virtual Assets Regulatory Authority (PVARA) responsibility for licensing and supervising virtual asset service providers, the finance minister said. The same authority has now been brought into the anti-money-laundering law's regulatory framework, alongside revised currency transaction reporting thresholds, according to reports of the government's AML-CFT decisions. The open question is no longer whether Pakistan will license VASPs, but whether the institutions doing the licensing can supervise them.
The design keeps licensed crypto activity at a deliberate distance from the banking system. The State Bank of Pakistan has introduced a conditional mechanism for extending banking facilities to licensed entities, subject to due diligence and segregation of client funds, the finance minister said. Accounts opened for entities holding no-objection certificates would serve a limited purpose until licensing was complete, and banks remain responsible for foreign exchange compliance. Restrictions on banks investing, trading or holding virtual assets through their own funds or customer deposits would remain. This suggests a model in which VASPs may touch the payment rails but banks may not touch the assets.
The economic case being made is about remittances rather than trading. The minister of state and PVARA chairman, Bilal Bin Saqib, said reducing transaction costs by two to three percent could bring an additional one billion dollars into the domestic economy annually, and that PVARA and the State Bank are working through a joint working group on a pilot focused on remittance corridors from Gulf nations. The finance minister separately said Pakistan received $41.6 billion in remittances last fiscal year, with first-quarter trends suggesting inflows could exceed $44 billion, and that tokenisation could improve remittance channels including transactions linked to Roshan Digital Accounts. The two claims sit at different stages: the remittance totals are reported outcomes, while the cost saving is an estimate of what lower fees could yield.
That distinction matters because the licensing regime does not by itself lower prices. The finance minister framed the next priority as effective implementation through capable supervision and institutional coordination, and said digital assets must complement the broader digital transformation with strong regulatory safeguards and institutional oversight. Whether licensed VASPs are permitted into remittance corridors, and on what terms, is not yet clear from the material. Nor is the timetable for awarding licences, the number of applicants, or the capital and custody standards PVARA will apply.
The anti-money-laundering changes point in two directions at once. The threshold for reporting daily cash transactions through banks rose from Rs2 million to Rs3 million, with reports to the Financial Monitoring Unit required above the new limit, while virtual assets were brought within the AML system and provincial anti-corruption agencies were offered powers subject to standard operating procedures. A higher cash reporting bar and a new regulated perimeter for crypto can coexist, but the combination suggests authorities are shifting scrutiny toward digital channels as formal banking oversight is recalibrated. What is not yet clear is how PVARA will share monitoring duties with the Financial Monitoring Unit in practice.
The open banking consultation, with comments due by November 30, 2026, is the piece that could connect licensing to the remittance goal. The State Bank's draft regulations would enable secure, consent-based data sharing and payment initiation through authorised third-party providers, and are expected to digitise business-to-business and consumer-to-business payments. Read alongside the VASP framework, this suggests the intended architecture is layered: licensed virtual asset firms, authorised third-party providers and banks each holding a defined role. The draft rules draw on the central bank's regulatory sandbox and include safeguards for data protection, cybersecurity and fraud prevention, but they do not mention virtual assets, and how the two regimes interact is not stated.
Brazil offers the closest comparison in the material. Its central bank closed its VASP licensing window, with banks, exchanges and brokers rushing to become regulated providers; the country's largest private bank filed to be authorised for crypto custody and intermediation, and tighter rules were said to push activity toward larger, better-capitalised lenders. Pakistan's framework differs in two respects visible here: the regulator is a dedicated authority rather than the central bank, and banks are explicitly barred from holding virtual assets on their own account. Brazil's experience suggests licensing concentrates activity among well-capitalised firms; whether Pakistan's separation of banks and virtual assets produces the same concentration, or instead leaves licensed VASPs dependent on payment access they do not control, is the central design question.
What to watch next is concrete. First, the licensing decisions themselves: which firms receive authorisation and what conditions attach to client fund segregation. Second, the Gulf remittance corridor pilot, and whether it moves from working group to live settlement. Third, the November 30 close of the open banking consultation and whether final rules address third-party access for licensed virtual asset firms. Fourth, how PVARA's new AML role is operationalised alongside the revised cash reporting threshold. The legislation is in place; the evidence that supervision lowers remittance costs is not yet.
