ISLAMABAD: The Upper House of Parliament on Friday passed a bill to regulate virtual assets as well as the “establishment” of the Pakistan Virtual Assets Regulatory Authority (PVARA), a body already created under an ordinance passed by the president in July last year.
The development comes as the ordinance was set to expire in early March.
The rules were suspended in the Senate to examine the bill, which was presented by Finance Minister Muhammad Aurangzeb for immediate consideration.
The preamble of the bill, a copy of which is available with Sunrisestated that it was desirable to establish a dedicated virtual asset regulatory authority to license, regulate and supervise virtual assets and virtual asset service providers to “ensure investor protection, transparency and market integrity in Pakistan.”
He further stated that it was necessary to provide a comprehensive legal framework to empower such authority to combat money laundering, terrorist financing, proliferation financing and other illicit activities involving virtual assets, in accordance with international standards.
Regulatory authority
The bill provides for the establishment of Pakistan Virtual Asset Regulatory Authority, envisaging it as an autonomous corporate body empowered to license, regulate and supervise virtual asset service providers and issuers in the country.
Elaborating on the functions of the body, the legislation says that it will “protect customers and investors and the integrity of Pakistan’s virtual asset markets by establishing and enforcing appropriate safeguards and business conduct requirements, prudential and operational resilience, risk management standards and measures to prevent money laundering, terrorist financing and other illicit uses of virtual assets.”
It will also attract investments and encourage companies operating in the field of virtual assets to set up their businesses in Pakistan.
Additionally, PVARA shall “promote responsible innovation, digital financial inclusion and the development of compatible virtual asset markets within a framework that manages risks and supports financial stability and market integrity.”
The body shall promote, develop, govern and regulate the adoption, deployment and scalable use of blockchain technology and distributed ledger technology throughout Pakistan, the bill states.
The legislation also provides that PVARA will coordinate with the Financial Monitoring Unit, the National Anti-Money Laundering and Terrorist Financing Authority and other relevant authorities, as well as law enforcement agencies, to combat money laundering, terrorist financing and other illicit activities associated with virtual assets, in accordance with the Anti-Money Laundering Law of 2010, other applicable laws and international standards.
The regulatory body will also advise the government on “regulatory, supervisory, technical or emerging risk matters related to virtual assets, digital asset markets, tokenization, stablecoin structures, blockchain, distributed ledger technology, cyber risks or any matter related to its mandate.”
The bill also authorizes PVARA to prepare “regulations, standards, directives, guidelines, manuals and circulars, or any other instrument”, consistent with the objectives of the legislation and other applicable laws.
It will also be authorized to establish technical and risk management standards, cybersecurity, data protection and “issue, modify, suspend or revoke licenses, approvals or directives under this Law and prescribe conditions for such actions.”
The bill further provides that it may prescribe license conditions, eligibility criteria, renewal requirements and any additional obligations for those licenses issued under the PVARA law yet to be formalized.
You will also be authorized to conduct on-site inspections and external monitoring of licensees and other entities to ensure compliance with this PVARA and other relevant rules and regulations.
In addition, according to the bill, the agency can also ensure compliance with “data protection, data governance and cybersecurity obligations by virtual asset service providers subject to supervisory monitoring.”
It will also be empowered to impose administrative sanctions in accordance with the provisions of the PVARA law and “impose the fees, charges and sanctions prescribed by the regulations” developed under this law.
PVARA will also operate regulatory sandboxes in a “transparent and accountable” manner and “enter into cooperation or mutual assistance agreements with domestic and foreign regulators and law enforcement agencies to facilitate information sharing and coordinated action, including mutual recognition of regulations and licenses,” the bill states.
It further details that the body will be composed of a chairman, who will be appointed by the federal government, two secretaries, each from the ministries of law and finance, the governor of the State Bank of Pakistan, the chairman of the Securities and Exchange Commission of Pakistan, the chairman of the National Anti-Money Laundering and Financing of Terrorism Authority, the chairman of the Digital Authority of Pakistan and two independent directors “with proven experience and a solid track record who have relevant experience in virtual asset markets, digital technology and digital finance”.
The directors will also be appointed by the federal government.
“Members of the authority, except ex officio members, shall serve for a term of three years and may be eligible for an additional term of three years,” the bill states.
Penalties
The bill states that “whoever intentionally provides a virtual asset service without a license shall be punished with imprisonment of up to five years, or with a fine of up to Rs 50 million, or with both.”
It adds that whoever makes an initial offering of virtual assets in contravention” of the rules and regulations established under the PVARA law will be punished with imprisonment of up to three years or fine of up to Rs 25 million, or both.
The bill also criminalizes market manipulation and insider trading.
It further states that “a virtual asset appeal court shall be established and no court shall entertain a legal dispute under this Act or the rules or regulations made thereunder to which the jurisdiction of the Virtual Asset Appeal Court extends.”
The jurisdiction of the court has been described as: “Any virtual asset service provider, licensee or any other person aggrieved by an order of the PVARA may prefer an appeal to the Virtual Asset Appeal Tribunal within 30 days from the date on which the order was communicated.”
In July last year, the government announced that President Asif Ali Zardari had approved the ‘Virtual Assets Ordinance, 2025’ to establish an independent regulator for virtual assets and cryptocurrencies.
However, an official statement from the Minister of State’s office referred to it as the “Virtual Assets Act 2025”, leading to confusion and concern over why the bill had not been moved to the National Assembly or the Senate, as is required for a bill to become an act of parliament.
The confusion was later cleared up when authorities confirmed to Sunrise that the regulation was not an act of parliament but rather an ordinance, issued under Article 89 of the Constitution. The provision allows the president to issue an ordinance on urgent matters when both houses are not in session; These ordinances remain in force for 120 days and do not require approval by the National Assembly or the Senate.
In November of last year, the Senate expanded the Virtual Assets Ordinance, 2025for another 120 days.
Source: https://www.dawn.com/news/1976197/with-presidential-ordinance-set-to-lapse-senate-passes-bill-for-regulating-virtual-assets