PVARA makes prior approval mandatory for all virtual asset pilots and partnerships

The Pakistan Virtual Assets Regulatory Authority (PVARA) on Monday issued a compliance advisory making it clear that any agreement, pilot project, or partnership involving virtual assets must obtain prior regulatory authorisation before being announced or implemented.

The advisory comes amid a rise in public disclosures by financial institutions regarding memoranda of understanding, pilot schemes and partnerships linked to virtual assets, including stablecoin-based remittance solutions and cross-border payment systems.

PVARA stated that under the Virtual Assets Act 2026, all activities involving virtual assets fall within its regulatory jurisdiction. These include issuance, transfer, custody, exchange, and any arrangement involving stablecoins, blockchain-based applications, and related digital asset services offered to users in Pakistan.

The authority also noted that earlier this month, the State Bank of Pakistan implemented a major policy shift through the enactment of the same law, effectively legalising and encouraging regulated use of virtual assets while establishing PVARA as the licensing, supervisory and enforcement body.

In its advisory, the regulator cautioned that any agreement or announced pilot that directly or indirectly enables virtual asset services without prior authorisation may trigger regulatory, reputational and compliance risks, including issues related to standards set by the Financial Action Task Force. It further warned that such unapproved initiatives may not be permitted to proceed under the law.

PVARA emphasised that while it supports responsible innovation in digital finance, compliance with regulatory procedures remains mandatory. It advised all individuals and institutions planning virtual asset pilots, tokenisation projects, stablecoin use cases, or blockchain-based solutions to engage with the authority in advance through formal channels, including the regulatory sandbox framework, no-action relief requests, or no-objection certificate processes, to secure prior approval before launching any activity.