Pakistan’s approach to cryptocurrency has entered a new phase. The Virtual Assets Act, 2026, established a statutory framework, with the Pakistan Virtual Assets Regulatory Authority (PVARA) responsible for licensing and overseeing virtual asset service providers.
On April 14, 2026, the State Bank of Pakistan (SBP) also replaced its earlier restrictive banking instructions with a framework allowing banks to open accounts for appropriately licensed providers, subject to safeguards.
PVARA’s Pakistan Virtual Asset Services Regulations, 2026, and Activity Specific Regulations, 2026, were notified on 21 August 2026. These developments are important, but licensing a service provider does not endorse every crypto-asset, guarantee its value or authorise every transaction a customer may undertake. Nor does it, by itself, settle whether a resident may buy assets through an overseas exchange, transfer them offshore, sell them abroad or retain the proceeds outside Pakistan.
That is the regulatory gap that now deserves attention. This is not an argument against cryptocurrency; it is an argument for connecting virtual-asset regulation with Pakistan’s foreign-exchange and tax frameworks.
Consider a Pakistani resident who uses a local debit or credit card to buy crypto-assets on an overseas platform. The payment settles through the international payments system, creating a foreign-currency outflow. The resident later transfers the assets to another platform, sells them and retains the proceeds abroad. If they do not bring those proceeds back, the original outflow may not be matched by a corresponding inflow.
This does not mean every offshore holding is unlawful or constitutes capital flight. The legal position depends on the transaction, applicable permissions, payment channel and individual circumstances. Residents may have legitimate reasons to hold assets abroad. The concern is that Pakistan should not inadvertently create a route for rupee-funded overseas purchases without clear rules for the subsequent transfer, sale and retention of value.
Crypto-assets can move quickly between exchanges and self-hosted wallets, sometimes without a conventional bank transfer at every stage. A bank may see a card payment at purchase, while subsequent transfers and sales occur beyond its direct view. The SBP’s Foreign Exchange Circular No 07 of 2022 set an annual limit of $30,000 per individual for card-based cross-border transactions and required payments to be consistent with personal needs and customer risk profiles, excluding commercial-purpose payments through individual cards. That limit should not be read as blanket permission to buy crypto. The SBP and PVARA need to clarify how existing rules apply to crypto purchases and related offshore transfers.
First, foreign exchange pressure: If substantial rupee-funded purchases become assets held abroad, they could increase demand for foreign currency without a transparent way to track the eventual proceeds. The scale of the risk should be measured, not assumed.
Second, tax leakage: A sale may generate a taxable gain, but the gross sale amount is not necessarily profit. Authorities need reliable records of acquisition costs, sale proceeds, fees, transfers, and ownership, along with clear rules for calculating gains and recognising losses.
Third, consumer and financial-integrity risks: Unbacked crypto-assets can lose most or all of their value, and customers may have limited recourse against offshore platforms. Transfers can complicate recovery from fraud or theft. There are also risks of money laundering, sanctions evasion and concealing the source or destination of funds.
These risks should not be conflated. A transaction can be risky without violating foreign exchange law; it can create a tax liability without necessarily being prohibited; and a licensed provider’s compliance does not automatically make every customer transaction lawful.
Pakistan need not choose between a blanket prohibition and unrestricted access. It should adopt a controlled, transparent approach.
One, clarify card-payment rules: SBP, PVARA and the relevant foreign exchange authorities should state whether, and under what conditions, Pakistani-issued cards may be used to buy virtual assets through domestic or foreign platforms. The guidance should distinguish licensed domestic purchases from payments to offshore exchanges and unhosted wallet services. Any permitted activity should have clear limits, reporting and risk-based monitoring.
Two, treat each stage separately: Permission to purchase a virtual asset should not automatically authorise its transfer offshore, sale through any overseas platform or retention of proceeds abroad. Rules should specify the conditions for transfers, when repatriation is required, when foreign retention is permitted and what exceptions apply. The aim is clarity and enforceability, not an indiscriminate requirement to bring every legitimate overseas asset home.
Three, build regulated domestic on- and off-ramps: Licensed intermediaries should be able to link rupee-funded acquisitions to subsequent sales and document where proceeds go. Customers seeking to cash out in Pakistan should have a regulated channel that verifies the source of funds and records the transaction, without treating the entire sale amount as taxable profit.
Four, give the FBR clear tax guidance: The FBR should explain the treatment of gains and losses, acquisition costs, fees, exchange-rate conversion, transfers between a person’s own wallets, staking or other crypto-related income, and required records. Tax compliance should be coordinated with foreign exchange rules: paying tax on a gain should not itself be treated as permission to transfer or retain capital abroad where separate restrictions apply.
Five, coordinate oversight and protect privacy: PVARA, SBP, FBR and the Financial Monitoring Unit should establish lawful procedures for sharing relevant information on licensed providers, suspicious transactions, cross-border transfers and taxable disposals. Access should be limited to authorised purposes, with safeguards against misuse and unnecessary duplication of reporting.
Six, measure before setting permanent limits: Authorities should publish anonymised aggregate data on licensed providers, transaction volumes, rupee-funded purchases, sales, domestic cashouts, cross-border transfers and tax collections. A pilot or regulatory sandbox could test reporting, wallet verification and repatriation arrangements. Limits should then be reviewed against evidence.
Pakistan has made meaningful progress by moving towards a statutory framework for virtual assets.
The next step is to connect it to monetary, foreign exchange and tax policy. The objective should be neither to push crypto activity back into an opaque informal market nor to allow an unmanaged channel for outward transfers. It should be to make lawful activity traceable, taxable where appropriate and consistent with cross-border rules.
The principle is simple: the right to acquire a virtual asset, transfer it overseas, sell it and retain the proceeds abroad are not necessarily the same right. Each needs a clear legal basis. A sound regime can support innovation, protect consumers, improve tax compliance, and safeguard Pakistan’s foreign-exchange framework, but only if it regulates the entire transaction, not just the platform at the start.
The writer is an ICT regulatory expert with over 20 years of experience. He can be reached at: [email protected]
Disclaimer: The viewpoints expressed in this piece are the writer’s own and don’t necessarily reflect Geo.tv’s editorial policy.
Originally published in The News
