In a major step toward regulating digital financial systems, the President of Pakistan has promulgated the “Virtual Assets Regulatory Authority Ordinance, 2025”, bringing the legal framework for cryptocurrencies and virtual assets into immediate effect nationwide.
The ordinance establishes a comprehensive regulatory mechanism for overseeing digital currencies, preventing misuse, and issuing operational licenses. Here’s a breakdown of the ordinance and its implications.
Establishment of the Virtual Assets Regulatory Authority (VARA)
According to the ordinance, the Virtual Assets Regulatory Authority (VARA) will be a corporate body with the legal status to:
File and defend legal cases
Own, buy, and sell property
Enter into contracts
The headquarters of the Authority will be based in Islamabad, with the power to establish regional offices anywhere in Pakistan.
Powers and Responsibilities of VARA
The Authority has been granted broad regulatory powers:
Licensing
VARA will be responsible for issuing, suspending, or cancelling licenses to:Virtual asset service providers (VASPs)
Exchanges and wallet operators
Supervision & Monitoring
It will frame rules and regulations for the oversight of virtual assets, ensuring secure and transparent digital transactions.Anti-Money Laundering & Counter-Terrorism
VARA will implement preventive measures against money laundering and the financing of terrorism through virtual assets.Investigation & Enforcement Powers
The Authority can:Conduct inspections
Demand records from entities
Summon parties for inquiries
Impose fines and suspend services for violations
Governance
VARA will be run by a Board of Directors, serving as the top policymaking body. The board will include:A Chairman
Two members from the Ministry of Finance and the Ministry of Law
Additional advisors (with board approval)
Licensing Conditions
No individual or organization will be allowed to offer virtual asset-related services without a valid license.
Operating without a license will be considered a criminal offense, subject to fines or legal action.
Applicants must:
Submit a formal application with a prescribed fee
Meet financial and administrative capability standards
Have no criminal record
The authority will also have the power to revoke licenses in cases of regulatory violations or failure to maintain financial stability.
Monitoring and Penalties
VARA will have the right to:
Inspect registered entities
Demand records and reports
Take disciplinary action against violations
Shut down services or suspend licenses if necessary
The ordinance empowers VARA to act decisively in the face of illegal activities, financial instability, or breach of compliance.
Context and Implications
Pakistan has been struggling to develop a clear regulatory stance on cryptocurrency. The 2025 ordinance marks the first formal and structured step toward legalizing and regulating digital assets, offering clarity to investors, exchanges, and developers.
This move comes amid increasing global scrutiny of crypto, and efforts by states to combat financial crimes in the digital economy.
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