Pakistan moves to regulate cryptocurrencies

ISLAMABAD: Pakistan’s ruling party Senator Dr Afnan Ullah Khan has introduced a private member’s bill, the “Virtual Assets Bill 2025’, a groundbreaking piece of legislation aimed at establishing a regulatory framework for the rapidly growing digital asset market including cryptocurrencies and blockchain-based technologies in the country.

A copy of the bill available with ‘The News’ seeks to lay the groundwork for the creation of a Digital Rupee, pegged to the Pakistani Rupee (PKR), under central bank regulations.

It aims to establish a legal and regulatory framework for the issuance, use, trading, and management of virtual assets within Pakistan, ensuring that such assets are backed by the Pakistani Rupee. A key element of the bill is the establishment of Virtual Asset Zones, areas designated for the trading and management of cryptocurrencies, which would help ensure financial stability, protect investors, and prevent illicit activities such as money laundering and terrorism financing.

The bill mandates that these zones comply with strict anti-money laundering (AML) and counterterrorism financing (CTF) regulations, and introduces transparency measures, including regular audits and reporting for entities involved in the virtual assets market. These measures are designed to foster trust and accountability in Pakistan’s financial system.

A central feature of the bill is the creation of a National Virtual Assets Regulatory Commission. The Commission will oversee the registration and licensing of virtual assets zones, exchanges, and service providers across the country. It will also monitor the issuance and maintenance of Pakistan Rupee-backed virtual assets, conduct audits of transactions, and enforce regulations related to AML and CTF compliance. Penalties will be imposed for non-compliance.

The primary objective of this bill is to ensure that virtual assets are securely managed, traded, and utilized within Pakistan, while providing a stable environment for investors and users. This will also pave the way for the launch of Pakistan’s own digital currency, further strengthening our economic position globally.

The bill proposes that the federal or provincial governments identify regions with surplus renewable energy, especially those with idle or underutilized power plants, to be designated as Virtual Asset Zones. These zones will benefit from tax incentives for the first five years of operation, provided they comply with AML/CTF standards.

Moreover, to encourage foreign investment in the country’s blockchain industry, the government will offer tax exemptions for up to three years for foreign entities or investors contributing to local blockchain projects or power plants.

The government will also allocate one-third of the revenue generated from virtual asset operations to local infrastructure development and education programs focused on blockchain technology.

Applicants seeking to operate within these zones must provide evidence of business registration, financial stability, AML/CTF compliance measures, and cybersecurity protocols. They must also maintain customer transaction records and identification data for a minimum of five years.

The Virtual Assets Bill 2025 is expected to have a significant impact on Pakistan’s cryptocurrency landscape, offering both regulatory oversight and opportunities for economic growth through blockchain innovation.