KARACHI: Pakistan’s parliament on Friday passed the Virtual Assets Act 2026, granting the Pakistan Virtual Assets Regulatory Authority (PVARA) powers to combat money laundering, militant financing and other illicit activities, the regulator said.

The legislation introduces regulatory provisions including mandatory licensing for virtual asset service providers, market surveillance mechanisms, anti-money laundering and counter-terrorism financing compliance, and coordination with Pakistani financial regulators including the State Bank of Pakistan and the Securities and Exchange Commission of Pakistan.

Pakistan has in recent months stepped up efforts to draft rules for regulating the fast-expanding market for digital coins and tokens, requiring virtual asset service providers to secure government approval. Islamabad’s move to embrace digital currency marks a significant policy shift as it had banned cryptocurrency in 2018, citing financial risks.

“A year ago, Pakistan’s digital asset landscape was defined by uncertainty and grey areas. Today, we have the country’s first Act of Parliament establishing a regulatory body for virtual assets, building on the Presidential Ordinance introduced in 2025,” PVARA Chairman Bilal bin Saqib said in a post on X.

“With NOCs [no objection certificates] already issued and banking rails being developed in coordination with the State Bank of Pakistan, we are now moving toward a comprehensive licensing framework aligned with global AML [anti-money laundering] and financial integrity standards.”

Meanwhile, PVARA said the framework aims to boost transparency, protect investors, and ensure a stable, trustworthy virtual asset market while supporting responsible fintech innovation.

“The legislation also equips the Authority with powers to address money laundering, terrorist financing, and other illicit activities associated with virtual assets, bringing Pakistan’s regulatory approach in line with international standards,” it added.

Pakistan ranks among the world’s largest cryptocurrency markets by adoption, with millions of citizens actively engaged in virtual assets.

In February, Dr. Afnanullah Khan, a Pakistani senator from the ruling party, had said major crypto coins such as Bitcoin, Ethereum and XRP will soon be traded in Pakistan through crypto exchanges.

Pakistan earlier launched a “regulatory sandbox” for firms to trial crypto services under PVARA’s supervision before full approval.

In January, Pakistan signed a memorandum of understanding with a World Liberty Financial-linked firm, tied to US President Donald Trump’s family, to explore a dollar-backed stablecoin for cross-border payments.