Pakistan is moving to tighten oversight of cryptocurrency activity through a new investigative unit and a developing licensing framework for virtual asset service providers.

The Federal Investigation Agency, or FIA, has created a dedicated Cryptocurrency Investigation Unit inside its National Command and Control Centre, according to Dawn. The unit is intended to investigate the use of virtual assets in money laundering, terrorism financing and related financial crimes. At the same time, the Pakistan Virtual Assets Regulatory Authority, or PVARA, has completed consultation on draft Virtual Asset Services Regulations, 2026, which set out a 10-category framework for VASPs and a pathway from a no-objection certificate to a full licence.

The measures point to a more formal enforcement and regulatory perimeter for crypto businesses serving Pakistani users. They also show two tracks developing at once: investigative capacity for suspected misuse of virtual assets and a licensing route for firms that want to operate within a defined regulatory framework. Exchanges, over-the-counter desks, brokers, payment gateways, custodians and other firms interacting with Pakistan may face more inquiries, stricter onboarding expectations and greater pressure to demonstrate compliance.

FIA establishes dedicated crypto investigation capacity

The FIA’s new Cryptocurrency Investigation Unit is housed within the National Command and Control Centre. Its stated focus is the misuse of virtual assets for money laundering, terrorism financing and other financial crimes, areas that form the core of many crypto-related investigations globally.

The broader enforcement effort goes beyond the creation of a single office. According to Dawn, the FIA is forming SWAT teams, expanding its vehicle fleet, creating a Director International Coordination position and recruiting about 1,300 officials to strengthen its operations. The addition of specialist personnel and an international coordination function could support more cross-border requests to exchanges, blockchain analytics providers and other entities involved in digital asset investigations.

For platforms serving Pakistani nationals, the development increases the importance of maintaining complete know-your-customer records, sanctions and politically exposed person screening, suspicious activity reporting workflows and transaction monitoring systems. Weak customer due diligence or poorly documented compliance processes could become more difficult to defend as enforcement capacity expands.

PVARA advances draft VASP regulations

In parallel with the FIA’s enforcement buildout, PVARA is developing the country’s formal regulatory framework for virtual asset businesses. The authority held a public consultation from June 11 to July 2, 2026, on its draft Virtual Asset Services Regulations, 2026.

The draft rules outline a 10-category licensing framework for VASPs and a no-objection-certificate-to-licence route. That structure suggests a staged onboarding process for applicants before full licensing is granted, giving regulators a way to screen business models, ownership, controls and risk management before authorizing full activity.

The categories are designed to cover a range of virtual asset business models rather than a single type of operator. Businesses potentially affected may include exchanges, brokers, dealers, custody providers, wallet service providers, token issuers, listing agents, NFT or marketplace operators and analytics or compliance service providers, depending on the final text and how activities are classified.

Companies operating across multiple functions may need to assess whether they fall into more than one category. Regulators often require separate approvals for distinct activities even when a company presents them to customers as one integrated product.

The consultation period has closed. The next steps are expected to include further revisions to the draft framework and implementation planning. For market participants, the process means compliance requirements are likely to become more defined, inspectable and enforceable.

Religious guidance requested on token classification

PVARA is also seeking religious guidance as part of its policy work. According to Reuters, PVARA’s chair asked Jamia Darul Uloom Karachi, a leading Islamic seminary, to help distinguish purely speculative cryptocurrencies from asset-backed tokens. The request comes as the authority considers policy issues involving stablecoins and real-world asset tokenization.

The request does not establish a final religious ruling, nor does it mean that every token linked to an off-chain asset will be approved. It does indicate that issuers and marketplaces may be expected to explain how value is created, how risks are allocated and what supports a token’s value.

For stablecoin issuers, relevant questions may include the composition of reserves, governance arrangements, redemption mechanics, settlement processes, audits and legal claims. Asset-linked tokens may also face disclosure expectations around the underlying assets, custody, ownership rights and risk-sharing mechanisms.

A working distinction may emerge between tokens whose prices are driven mainly by market demand and tokens tied to identifiable reserves or assets. Speculative coins could face higher scrutiny or restrictions, while asset-backed products could have a pathway to conditional approval if they satisfy final regulatory and religious criteria. The exact outcome will depend on PVARA’s final rules and any guidance it receives.

Compliance priorities for platforms serving Pakistan

Platforms with Pakistani users may need to review their access policies and user perimeter. If a company is not prepared to comply locally, it may need to evaluate whether geofencing, restricted functionality or a formal licensing assessment is required.

Customer onboarding is likely to receive closer attention. Standard controls may include government ID validation, liveness checks, updated customer selfies, enhanced due diligence for higher-risk geographies or occupations and ongoing sanctions and PEP screening. Regulators and investigators are also likely to expect clear audit trails showing when decisions were made and why.

Anti-money laundering systems are another focus area. Businesses enabling fiat or crypto transfers may need Travel Rule workflows, counterparty due diligence where feasible, blockchain analytics, risk scoring, transaction limits, manual review queues and structured suspicious activity reporting. Case management systems should preserve narratives, timestamps, evidence and decision logs in a form that can be exported for law enforcement requests.

Licensing preparation may also become necessary before licences are formally issued. Relevant materials may include board-level oversight records, named responsible persons, a designated money laundering reporting officer, AML policies, market abuse controls, listing standards, consumer complaints procedures, vendor lists, risk assessments and evidence of financial soundness.

An inspection file could include an organizational chart, product map, KYC and AML policies, vendor details, recent alert histories, suspicious activity reports and contact information for rapid follow-up. The ability to provide records within 24 to 48 hours may become important if enforcement requests increase.

Effects on retail users and P2P activity

Tighter enforcement can also affect individual users. Onboarding may become slower, peer-to-peer spreads may widen and withdrawals may face additional checks. P2P traders could see higher premiums, more scams presented as liquidity and a greater chance that transfers are flagged for review.

Users relying on reputable platforms with dispute resolution and documented onboarding may face fewer operational risks than those using informal cash brokers or unsolicited Telegram deals. Offers of instant USDT at unusually favorable rates can raise concerns about scams, mule activity or illicit funds.

Users may also need to keep clearer records of transfers, counterparties and trading activity. Device histories, IP records, deposit and withdrawal logs and transaction explanations may become relevant if funds are questioned. Tax and reporting rules remain subject to change, making transaction records important for future compliance.

This information is not legal, tax, investment or financial advice. Users and businesses should consult local guidance and qualified counsel where needed.

Cross-border exchanges face access and licensing decisions

International exchanges may respond to Pakistan’s regulatory changes in different ways. Some may restrict access while they assess licensing exposure. Others may allow limited functionality, such as view-only accounts, while blocking transactional activity until their compliance position is clearer.

Platforms that continue to serve Pakistani users may need to avoid informal local fiat arrangements and provide clear disclosures where local on-ramps are unavailable. Risk systems may link address risk scores to dynamic withdrawal limits, enhanced reviews or reporting obligations rather than applying only broad countrywide restrictions.

If final regulations require a platform to stop activity in Pakistan, the company may need a withdrawal window, customer communications, dormant-account procedures and a process for handling unresolved balances or compliance holds.

Possible on-chain and market structure changes

When enforcement increases and licensing frameworks are introduced, several patterns can occur across crypto markets. P2P premiums may rise as unlicensed cash dealers price in higher risk, then narrow if regulated on-ramps become available. Stablecoin use may increase where users seek more predictable units of account during periods of regulatory uncertainty.

Reuters reported that PVARA has requested guidance on distinguishing speculative coins from asset-backed tokens as it develops policy for stablecoins and tokenized real-world assets. If the final framework provides a clearer route for properly backed tokens, those products could receive different treatment from purely speculative assets, depending on the final rules and religious guidance.

Trading volume may also concentrate on larger venues with stronger compliance budgets, while smaller platforms may struggle to meet new requirements. On-chain behavior can shift as users avoid mixers, move through more reputable venues and reduce address reuse in response to analytics and enforcement pressure. Exchanges may become more cautious about listing new tokens that lack disclosures or documentation they can defend to regulators or auditors.

These outcomes are not guaranteed. The final effect will depend on the text of the rules, enforcement priorities and how domestic and foreign platforms respond.

Enforcement posture before and after the changes

Before the latest developments, crypto-related cases in Pakistan were generally handled by broader cybercrime or financial crime teams on a more ad hoc basis. The new FIA unit creates a dedicated function at the National Command and Control Centre focused on virtual assets.

Resource levels are also changing. Dawn reported plans for SWAT teams, more vehicles and about 1,300 new hires. The creation of a Director International Coordination role could streamline cross-border cooperation and information requests.

Regulatory clarity is also increasing. PVARA’s draft VASP regime has gone through consultation and includes a no-objection-certificate-to-licence route. Product design may also face new considerations because PVARA has formally engaged Islamic scholars on token classification.

Four-week preparation plan for firms

A first step for firms is a gap assessment. Businesses can map their products to likely VASP categories, test KYC workflows end to end and review a sample of recent transactions for AML red flags.

The second step is documentation. Firms may need finalized AML policies, market abuse policies, listing standards, complaints procedures, escalation matrices and an acting MLRO or equivalent responsible person.

The third step is tooling and records. Travel Rule systems, blockchain analytics, automated exposure flags, SAR templates and exportable case files can help firms respond to regulatory and law enforcement inquiries.

The fourth step is a dry run. A mock examination or subpoena-style request can test whether the team can produce relevant records within 48 hours and identify weaknesses in systems, documentation or decision-making.

Regulators generally focus not only on whether controls are perfect, but whether firms have identified risks, assigned responsibility and maintained evidence of their decisions.

Frequently asked questions

Is crypto legal in Pakistan right now?

Policy is actively evolving. The FIA is increasing enforcement capacity, and PVARA has consulted on a draft licensing regime for VASPs. The developments point to tighter oversight rather than a broad regulatory clearance for all crypto activity.

What is the FIA’s Cryptocurrency Investigation Unit responsible for?

The unit sits inside the National Command and Control Centre and focuses on the misuse of virtual assets for money laundering, terrorism financing and related crimes. Dawn reported that the FIA is also adding resources and coordination channels to support investigations.

What did PVARA’s consultation cover?

PVARA’s consultation covered the draft Virtual Asset Services Regulations, 2026. The draft includes a 10-category licensing framework for VASPs and a no-objection-certificate-to-licence pathway. The consultation window closed on July 2, 2026.

Will stablecoins be treated differently from other tokens?

PVARA has asked Islamic scholars to help distinguish speculative coins from asset-backed tokens as it develops policy on stablecoins and tokenized real-world assets. Final treatment will depend on the completed rules and any religious guidance.

Could foreign exchanges block Pakistani users?

Yes. Some foreign exchanges may restrict or narrow access while evaluating licensing and compliance exposure. Others may permit limited functionality with enhanced KYC or other controls. Responses will depend on each platform’s risk appetite and the final regulatory framework.

What records should platforms keep for potential FIA requests?

Platforms should maintain clean KYC files, deposit and withdrawal logs with address metadata, device and IP histories, sanctions and PEP screening results and structured suspicious activity narratives. Exportable records that can be provided within 24 to 48 hours may be useful if requests increase.

What is the immediate risk to P2P traders?

P2P traders may face higher premiums, more scams presented as liquidity and a greater likelihood that transfers are flagged for review. Clear records and use of reputable venues with dispute resolution may reduce operational risk.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial or other advice.