Pakistan passed the Virtual Asset Ordinance (VAO), marking a watershed moment in the country’s financial and regulatory landscape. By providing a clear legal framework for digital asset issuance, trading, and custody, the ordinance has unlocked a new realm of economic opportunities. Below, we explore how the VAO is driving growth and why a dedicated statutory body is essential for sustainable development.
1. Unlocking Market Potential
Before the ordinance, virtual asset activities operated in a regulatory gray area, deterring mainstream banks, institutional investors, and fintech innovators. The VAO:
- Establishes liability standards for service providers.
- Hospitalizes token sales (ICOs, security tokens) under existing securities legislation.
- Facilitates cross-border payment solutions via stablecoins.
2. Enhancing Foreign Direct Investment (FDI)
Governments worldwide are increasingly offering “smart‑economy” incentives. By codifying BTC, ETH, and tokenized securities, Pakistan signals to foreign investors that it has a robust legal backing. Early adopters include:
- Blockchain‑native startups from the EU and US.
- Regional payment‑service providers looking to tap Pakistan’s digitized remittance corridor.
3. Stimulation of Tech‑Based Job Creation
The ordinance paves the way for a plethora of tech roles: compliance officers, blockchain engineers, legal counsel specializing in crypto‑law, and risk analysts. According to a PwC survey, crypto‑related employment in South Asia has grown 48% annually over the last five years.
4. Financial Inclusion & Remittances
With remittance inflows already exceeding $40 billion yearly, the VAO could streamline digital transfers, cutting costs from 5‑7% traditional wires to <2%, saving millions for migrant workers.
5. Stablecoin Adoption & Monetary Policy
The ordinance permits the State Bank to issue regulated stablecoins, providing a “digital dollar” that lowers transaction friction while retaining monetary control.
Why a Statutory Regulatory Body?
Although the ordinance sets the groundwork, a dedicated statutory entity—such as a Virtual Asset Authority—will:
- Issue licenses, ensuring compliance with AML/KYC standards.
- Impose sector‑specific prudential norms, protecting investors.
- Serve as a single point of contact for liaising with the State Bank, Securities and Exchange Commission Pakistan (SECP), and international regulators.
- Gather and publish data to foster market transparency.
- Benchmark against global best practices (e.g., Singapore’s MAS, UAE’s DFSA), ensuring Pakistan remains competitive.
Benefits of a Statutory Body
- Credibility: Signals intent and stability to local and global participants.
- Risk Mitigation: Enables real‑time monitoring, reducing systemic risks.
- Policy Coherence: Aligns crypto regulation with monetary, tax, and corporate laws.
- Dispute Resolution: Provides a court‑level mechanism for intra‑sector disputes.
- Innovation Sandbox: Allows pilot projects (e.g., CBDCA pilots) without compromising overall market safety.
What are the Objects of the Pakistan virtual Assets Ordinance, 2025?
- Establish Regulation: Create a comprehensive legal regime for licensing, supervising, and regulating virtual assets and VASPs.
- Combat Illicit Finance: Prevent money laundering, terrorist financing, and other illicit uses of VAs, aligning with FATF standards.
- Investor Protection: Secure customer funds, monitor market conduct, and prevent manipulation.
- Promote Innovation: Introduce a regulatory sandbox for testing new technologies (like blockchain).
- Ensure Shariah Compliance: Establish a Shariah Advisory Committee for Islamic finance adherence.
- Foster Digital Economy: Integrate virtual assets responsibly into Pakistan's growing digital economy.
- Build Institutional Capacity: Create PVARA as the central regulator and establish an Appellate Tribunal for dispute resolution.
Conclusion
The Virtual Asset Ordinance has positioned Pakistan to harness the economic promise of digital assets. Yet, the ordinance’s true potential will materialize only if accompanied by a robust, statutory regulatory framework that protects consumers, ensures market integrity, and paves the way for sustainable growth.
