Pakistan’s central bank, the State Bank of Pakistan, is set to launch a central bank digital currency (CBDC) pilot while the government finalizes new crypto regulations.
Expert opinion suggests potential regulatory clarity and infrastructure improvements. More so, local sentiment is broadly positive, focusing on regulatory potential and new initiatives.
Pakistan To Launch CBDC Pilot And Finalize Crypto Regulations
Pakistan’s central bank governor, Jameel Ahmad, announced the imminent launch of a digital currency pilot, part of broader efforts to strengthen the country’s financial framework.
This strategic move aligns with the approval of the “2025 Virtual Assets Act” to regulate cryptocurrency.
The new framework is set to reshape Pakistan’s regulatory landscape by providing structured oversight.
This includes forming alliances with technology partners to regulate virtual assets efficiently. Initial implementation outcomes are expected to bolster financial infrastructure and streamline licensing procedures for cryptocurrency entities.
According to Jameel Ahmad, Governor, State Bank of Pakistan, “We are building up our capacity on the central bank digital currency and hope to launch the pilot soon. The new law will lay down the foundations for the licensing and regulation of the virtual assets sector, and we are already in touch with some technology partners.”
Pakistan’s Digital Currency Pilot to Revolutionize Banking Systems
At the Reuters NEXT Asia Summit, Jameel Ahmad highlighted plans for a digital currency pilot aimed at modernizing Pakistan’s banking system.
The “2025 Virtual Assets Act,” approved by the government, will establish an agency to regulate this sector. The Minister for Blockchain and Cryptocurrency Affairs endorsed this legislative innovation as a crucial regulatory advancement.
Market responses from key stakeholders reveal cautious optimism, underscoring the importance of technological alignment for effective regulation.
Jameel Ahmad stressed the dual nature of cryptocurrency as both an opportunity and a risk, which demands careful assessment. Local and regional financial experts have voiced their support for these regulatory measures.
“The Authority has been granted comprehensive powers to ensure transparency, compliance, financial integrity, and the prevention of illicit activities, in alignment with international standards including those of the Financial Action Task Force (FATF),” the finance ministry said, describing the powers of the new regulator set up under the Virtual Assets Act.
Financial Experts Weigh in on Regulatory Impacts and Market Reactions
Insights from industry experts indicate that the new regulatory framework could enhance Pakistan’s digital financial landscape. Strategic alignment in technological partnerships is necessary for effective implementation.
New Powers
The law gives PVARA powers to combat illicit finance and enforce transparency in line with the FATF framework, a key benchmark for Pakistan, which was removed from the FATF grey list in 2022 after significant reforms.
The regulator’s governing board will include top officials from Pakistan’s economic and regulatory institutions: the governor of the State Bank of Pakistan, secretaries of finance, law, IT and telecom, as well as the chairpersons of the Securities and Exchange Commission of Pakistan, the Federal Board of Revenue and the Digital Pakistan Authority.
Two independent directors with expertise in law, technology, or finance will also be appointed by the federal government.
The chairperson of the Authority, who will lead PVARA’s operations, is to be selected based on “demonstrated experience in finance, law, technology, or regulatory affairs,” according to the statement.
In a nod to Pakistan’s Islamic financial system, the law mandates the creation of a Shariah Advisory Committee to advise PVARA on the religious permissibility of virtual asset products and services. Any licensed firm offering Shariah-compliant services must adhere to this committee’s rulings.
To handle disputes, the law also establishes a Virtual Assets Appellate Tribunal, which will operate independently and include experts in law, finance, and technology to hear appeals against regulatory decisions.
The legislation provides space for responsible innovation by allowing startups and developers to test blockchain-based products within a regulatory sandbox, a controlled environment supervised by PVARA.
The authority may also issue no-action letters, temporarily exempting experimental projects from certain rules under defined conditions.
