ISLAMABAD: Pakistan’s Virtual Assets Regulatory Authority (PVARA) on Friday launched a crypto testing framework to regulate digital assets, allowing firms to trial new products and services under official supervision.

The initiative, formally structured as a regulatory “sandbox,” creates a controlled environment where companies can test crypto-related services under the oversight of the regulator before full-scale approval.

According to PVARA, the sandbox will support real-world use cases including tokenization, stablecoins, remittances and on- and off-ramp infrastructure.

Tokenization refers to converting real-world assets into digital tokens on a blockchain, while stablecoins are cryptocurrencies pegged to a fiat currency to maintain a stable value. On- and off-ramp infrastructure allows users to convert between fiat money and digital assets, enabling the practical use of virtual asset products.
“The Pakistan Virtual Assets Regulatory Authority has formally approved and launched its Regulatory Sandbox for virtual assets,” PVARA said in a post on X. “Sandbox Guidelines and the application process will be published shortly on our website.”

The move comes as the government seeks to build a formal regulatory framework for digital assets while attracting investment and strengthening oversight of the sector.

Pakistan has stepped up efforts recently to regulate its digital asset sector and is exploring digital currency initiatives as part of broader measures to reduce cash usage.

In January, Pakistan signed a memorandum of understanding with a company affiliated with World Liberty Financial, a crypto-based finance platform launched in September 2024 and linked to US President Donald Trump’s family to explore the use of a dollar-linked stablecoin for cross-border payments.