Pakistan has unveiled a draft framework to regulate virtual asset services and strengthen oversight of its digital financial ecosystem. The new rules aim to align with global anti-money laundering (AML) and counter-terror financing (CTF) standards.
The regulations require virtual asset service providers (VASPs) to monitor large crypto transactions and prevent illicit financial flows. Any transfer exceeding Rs1 million must be reported in a detailed database. This step is part of Pakistan’s effort to comply fully with the FATF Travel Rule.
Under the proposed system, VASPs must maintain and provide records of both senders and recipients of crypto funds. Blockchain tracking tools will be compulsory, and unidentified or high-risk transactions will face strict scrutiny.
The framework covers major crypto activities including exchanges, custody, brokerage, and token issuance. Cybersecurity has been highlighted as a top priority. Every VASP must implement an annual cybersecurity policy approved by the relevant authority to protect users and data.
Investor protection is also a key focus. The rules mandate capital requirements, security deposits, and financial stability measures. Security deposits will only be returned after complete clearance when a business shuts down. Fit-and-proper criteria for board members will be mandatory, with any ownership or control changes requiring prior approval from the Virtual Asset Authority.
Continuous system testing and audits will be compulsory to ensure operational integrity. Pakistan is also preparing dedicated laws for fintech and digital enterprises, adopting a risk-based, technology-driven approach to identify illicit activity efficiently.
Authorities are considering a new data-sharing mechanism to combat financial crimes. A special monitoring unit may also be created to oversee blockchain transactions and enhance surveillance across Pakistan’s emerging digital asset market.
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This draft framework demonstrates Pakistan’s commitment to secure and transparent virtual asset services, while promoting investor confidence and international compliance.
