Pakistan Compliance Report

Generated 2026-09-22

Comprehensive Framework

Regulatory Overview

Regulatory Status: Dedicated crypto/VA legislation, licensing regime, active enforcement
Key Regulator(s): Bank of Pakistan BPRD Circular No, Securities and Exchange Commission of Pakistan, Federal Investigation Agency, Ministry of Law
Primary Legislation: The Securities Act, 2015, provides for certain exemptions from prospectus requir, Securities Act, 2015, FBR Income Tax Ordinance, 2001: Section 115BBB treats capital gains from crypto
Travel Rule: Not adopted
Tax Reporting: State Bank of Pakistan (SBP): Has repeatedly issued warnings against dealing in cryptocurrencies, considering them illegal tender and a risk to financial stability. SBP has also restricted banks and financial institutions from processing transactions related to virtual currencies.. Reference: SBP Press Releases and Circulars (e.g., Press Release dated April 6, 2018, warning against cryptocurrencies). While specific URLs for all related circulars might change, the official stance is publicly available on the SBP website.. SBP Official Website: https://www.sbp.org.pk/. Securities and Exchange Commission of Pakistan (SECP): Has also cautioned the public about the risks associated with investing in virtual currencies.. Reference: SECP Investor Alerts/Press Releases.

Key Facts

aml Anti-Money Laundering Act, 2010 (AMLA 2010): This is the overarching legislation that criminalizes money laundering and provides the legal basis for AML/CFT measures in Pakistan. It mandates reporting obligations for financial institutions and designated non-financial businesses and professions (DNFBPs). AMLA 2010 Link (often found on FMU or Ministry of Law & Justice websites) (PDF link to FMU website) Anti-Money Laundering (AML) Regulations, 2015: Issued by the State Bank of Pakistan under the AMLA 2010, these regulations provide detailed guidelines to financial institutions on implementing AML/CFT measures. SBP AML Regulations 2015 Link (often found on SBP website) (PDF link to SBP website) SBP CDD / KYC Regulations, 2022 (BPRD Circular No. 04 of 2022): This is a critical development. The State Bank of Pakistan, through its Banking Policy & Regulations Department (BPRD), issued comprehensive Customer Due Diligence (CDD) / Know Your Customer (KYC) Regulations, 2022. These regulations explicitly define and include "Virtual Asset Service Providers" (VASPs) as a type of entity that must comply with AML/CFT requirements, effectively bringing them under the regulatory ambit. Key Aspect: These regulations define a VASP, consistent with FATF definitions, and mandate that they adhere to all the CDD/KYC obligations applicable to other financial institutions. SBP BPRD Circular No. 04 of 2022 (CDD/KYC Regulations, 2022) (PDF link to SBP website) Individuals: Obtain and verify full legal name, date of birth, national identity document (e.g., CNIC for Pakistani nationals, passport for foreigners), current address, contact details, and occupation/source of funds. Verification must be performed using reliable, independent source documents, data, or information.
custody SBP Circular (January 2018): The State Bank of Pakistan issued Circular No. 03 of 2018, titled "Prohibition of Dealing in Virtual Currencies/Tokens (VCs/ICTs)." This circular explicitly stated that VCs/ICTs are not legal tender in Pakistan and prohibited all banks, financial institutions, and payment system providers from dealing in, processing, or facilitating transactions involving VCs/ICTs. The State Bank of Pakistan Circular No. 03 of 2018's prohibition remains in effect, but the Pakistan Virtual Assets Regulatory Authority is actively considering its withdrawal, indicating the policy is no longer settled or dominant. Update (2022-2023): While there have been ongoing discussions and government committees formed to evaluate the possibility of regulating cryptocurrencies, no formal change to the SBP's stance or new legislation has been enacted. Reports in local media suggest that committees involving the Ministry of Finance, Law Ministry, and the SBP have explored various options, including maintaining a ban or developing a regulatory framework, often influenced by FATF recommendations. Pakistan has enacted the Virtual Assets Act, 2026, which requires all Virtual Asset Service Providers, including cryptocurrency custodians, to obtain a license from the Pakistan Virtual Assets Regulatory Authority (PVARA). Segregation of Client Assets Rules: No specific rules for the segregation of client digital assets exist. While traditional financial institutions (like banks or brokerages) have strict client asset segregation rules under the relevant banking and securities laws (e.g., Securities Act, 2015, Banking Companies Ordinance, 1962), these do not apply to unregulated digital assets. There are no mandates for insurance or bonding requirements for digital asset custodians. No specific mandates or best practices regarding cold storage (offline storage of private keys) for digital assets are prescribed by Pakistani regulators.
enforcement Entity Targeted: Binance Pakistan (and implicitly, individuals running scam schemes facilitated through Binance). Violation Type: Alleged involvement in multi-million dollar cryptocurrency scam, money laundering, illegal financial transactions, non-compliance with local regulations. The FIA issued a formal notice to Binance's Global Head of Growth for its alleged role in facilitating fraudulent transactions that led to significant financial losses for Pakistani citizens. Penalty Amount: No direct fine was publicly levied against Binance by Pakistani authorities. The "penalty" was primarily investigative pressure, a formal inquiry, and a demand for cooperation, which could have led to further action or reputational damage. The FIA initiated criminal proceedings against individuals involved in the scam. Outcome: The FIA launched an inquiry and issued a formal notice to Binance, demanding details and cooperation. Binance subsequently stated its commitment to cooperate with the FIA and local authorities. The FIA also identified and initiated action against 11 individuals alleged to be masterminds of a multi-million dollar fraud scheme involving Binance. The action highlighted the government's serious concerns about unregulated crypto activities. While Binance itself wasn't fined, the action put significant pressure on the exchange and warned the public.
general Criminal investigations by the FIA against individuals involved in crypto-related scams or illegal financial activities. General warnings and advisories from financial regulators. Blocking of websites and applications deemed to be operating illegally. Regulator Name: Federal Investigation Agency (FIA) – Cyber Crime Wing Entity Targeted: Binance Pakistan (and implicitly, individuals running scam schemes facilitated through Binance) Violation Type: Alleged involvement in multi-million dollar cryptocurrency scam, money laundering, illegal financial transactions, non-compliance with local regulations. The FIA issued a formal notice to Binance's Global Head of Growth for its alleged role in facilitating fraudulent transactions that led to significant financial losses for Pakistani citizens. Penalty Amount: No direct fine was publicly levied against Binance by Pakistani authorities. The "penalty" was primarily investigative pressure, a formal inquiry, and a demand for cooperation, which could have led to further action or reputational damage. The FIA initiated criminal proceedings against individuals involved in the scam. Date: January 2022
licensing A standing prohibition by the State Bank of Pakistan (SBP) for regulated financial institutions to deal in or facilitate virtual assets. Ongoing discussions and proposed legislative efforts, primarily driven by the need to comply with Financial Action Task Force (FATF) recommendations, to eventually introduce a regulatory framework. SBP BPRD Circular No. 03 of 2018: Issued on April 06, 2018, this circular explicitly prohibits all banks, Microfinance Banks (MFBs), and Payment System Operators (PSOs)/Payment Service Providers (PSPs) from: Dealing in Virtual Currencies/Coins/Tokens (VCs/VCOs/VCTs). Facilitating any transaction involving VCs/VCOs/VCTs. Maintaining accounts of individuals/entities involved in VCs/VCOs/VCTs. Implication: This circular effectively creates a de facto ban on any regulated financial institution in Pakistan from engaging with or facilitating cryptocurrency activities. This means that: Cryptocurrency exchanges, custody providers, and payment processors cannot legally operate with bank accounts in Pakistan or integrate with the traditional financial system.
securities Pakistan has no dedicated cryptocurrency or digital asset securities law; crypto assets are not recognized as "securities" under the Securities Act, 2015, and no license exists for crypto exchanges or digital asset brokers. Securities & Exchange Commission of Pakistan (SECP) SECP has not issued any license to a cryptocurrency exchange, digital asset custodian, or token issuer as of 2025–2026; the SECP maintains a public list of companies suspected of engaging in unauthorized activities, including unlicensed crypto-related entities. Securities & Exchange Commission of Pakistan (SECP) The practical reality is that crypto businesses cannot obtain a securities license in Pakistan because the legal framework does not accommodate digital assets; any entity offering crypto brokerage or exchange services operates outside the law and faces enforcement risk. Securities & Exchange Commission of Pakistan (SECP) SECP's regulatory sandbox exists, but it has not been publicized as accepting crypto-related fintech applications, and no crypto firm has emerged from the sandbox with a license. Securities & Exchange Commission of Pakistan (SECP) SECP became operational on January 1, 1999, and its mandate includes regulation of the corporate sector and capital market, supervision of insurance companies, and regulation of non-banking finance companies and private pension schemes. Securities & Exchange Commission of Pakistan The Securities Act, 2015 is the primary law governing securities activities in Pakistan, and it defines which activities constitute regulated securities activities; crypto assets are not classified as securities under this Act. Brokers & Agents - Licensing | SECP The Securities Brokers (Licensing and Operations) Regulations, 2016 (SB Regulations) are the secondary legislation that prescribes eligibility conditions, licensing procedures, renewal requirements, and general obligations for securities brokers. Brokers & Agents - Licensing | SECP The Companies Act, 2017 governs company incorporation in Pakistan, and companies engaged in specialized businesses, including financial services, must obtain a No Objection Certificate (NOC) or license from the relevant regulatory authority, which for securities would be SECP. Securities & Exchange Commission of Pakistan
stablecoin No Explicit Classification: Pakistani law does not explicitly classify stablecoins as e-money, payment tokens, or securities. Not Legal Tender: The State Bank of Pakistan has explicitly stated that virtual currencies/coins/tokens are not legal tender. E-money/Payment Token: If a stablecoin were designed to maintain parity with the Pakistani Rupee (PKR) and facilitate payments, it could hypothetically be viewed through the lens of SBP's Electronic Money Institutions (EMI) regulations. However, stablecoins are not currently authorized EMIs. Security: If a stablecoin represented an investment in an underlying asset pool managed by an issuer and offered features akin to investment products, the Securities and Exchange Commission of Pakistan (SECP) could potentially classify it as a security under the Companies Act 2017 or Securities Act 2015. Current Reality: Stablecoins, like other cryptocurrencies, are simply considered "virtual assets" which are not recognized or regulated. None: As there is no specific regulatory framework for stablecoins, there are no established reserve requirements outlined in Pakistani law for stablecoin issuers. None: Similarly, there are no specific licensing requirements for stablecoin issuers in Pakistan. Issuing stablecoins is not a recognized or licensed activity. None: There are no legally enforceable redemption rights for stablecoin holders under Pakistani law. The ability to redeem stablecoins for the underlying pegged asset depends entirely on the issuer's terms of service and trustworthiness, as there is no regulatory oversight.
status Legal Status: Ambiguous; not recognized as legal tender. Regulator: SECP (with oversight from FBR for taxation). Licensing: No specialized crypto license; activities fall under existing financial service licensing regimes. Compliance: Entities must comply with general AML/KYC, tax reporting, and data protection rules. SECP Regulations: Govern issuance, trading, and related activities under existing securities and money transmission frameworks. No specific crypto ordinance; relies on the Securities (Issue and Trading of Shares and Other Securities) Rules, 2018. Pakistan is a member of FATF (Financial Action Task Force), adhering to its AML/CFT standards for virtual asset service providers (VASPs). Virtual Asset Service Providers (VASPs), including exchanges and wallet services, fall under the SECP’s “Money Transmission” or “Securities Exchange” licensing categories. No specific monetary thresholds are stipulated for crypto‑related licenses; general capital adequacy norms of the issuing license apply.
tax State Bank of Pakistan (SBP): Has repeatedly issued warnings against dealing in cryptocurrencies, considering them illegal tender and a risk to financial stability. SBP has also restricted banks and financial institutions from processing transactions related to virtual currencies. Reference: SBP Press Releases and Circulars (e.g., Press Release dated April 6, 2018, warning against cryptocurrencies). While specific URLs for all related circulars might change, the official stance is publicly available on the SBP website. SBP Official Website: https://www.sbp.org.pk/ Securities and Exchange Commission of Pakistan (SECP): Has also cautioned the public about the risks associated with investing in virtual currencies. Reference: SECP Investor Alerts/Press Releases. SECP Official Website: https://www.secp.gov.pk/ If the capital asset (crypto) is held for more than one year, the gain is taxed at a flat rate of 15%. Note: Certain exemptions or different rates apply to specific capital assets like shares of listed companies or immovable property, but these are generally not applicable to cryptocurrencies.
travel rule No. Pakistan has not adopted the FATF Travel Rule. This is primarily because the State Bank of Pakistan (SBP), the central bank and primary financial regulator, along with the Ministry of Finance and other relevant bodies, have taken a position against cryptocurrencies and virtual assets. In April 2018, the SBP issued a circular prohibiting banks and other financial institutions from processing transactions for cryptocurrencies and Initial Coin Offerings (ICOs), deeming them "not legal tender." This stance has largely been reaffirmed and maintained. Subsequent directives, often stemming from court proceedings (e.g., Sindh High Court), have further solidified this prohibitory approach. Not applicable. Since the Travel Rule has not been adopted, there is no effective date for its implementation. Not applicable. Without a regulatory framework for VASPs or the Travel Rule, there are no defined threshold amounts for VASP-to-VASP or VASP-to-self-hosted wallet transfers. None. As VASPs are not legally permitted to operate in Pakistan, there are no legally covered entities that would be subject to the Travel Rule. Any entity attempting to provide VASP services in Pakistan would be doing so outside the law. Not applicable. There are no specific technical implementation requirements for the Travel Rule, as there is no legal framework for it. While there are no specific penalties for "Travel Rule non-compliance," individuals or entities involved in virtual asset activities in Pakistan could face penalties under existing Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) laws if their activities are deemed illicit or violate the SBP's prohibitions.

Sources

This report is AI-generated from publicly available regulatory sources. Last updated: 2026-09-09. View full profile