Pakistan Launches First VA/VASP Regulatory Framework

Curbing financial crime risks such as money laundering and terrorism financing

By DTD- On Apr 10, 2025

Islamabad: In a landmark development for Pakistan’s digital finance ecosystem, the National Working Group on Virtual Assets and Virtual Asset Service Providers (VAs/VASPs) has proposed the country’s first-ever comprehensive policy framework aimed at regulating the virtual asset sector. The initiative, aligned with international standards set by the Financial Action Task Force (FATF), marks a significant step toward responsible innovation in the digital economy.

Formed in January 2024 under the Ministry of Finance, the Working Group operates under the overall supervision of the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) Authority and is spearheaded by the Federal Investigation Agency (FIA). The group comprises senior representatives from key institutions including the State Bank of Pakistan, the Securities and Exchange Commission of Pakistan (SECP), the Financial Monitoring Unit (FMU), the Federal Board of Revenue (FBR), the National Counter Terrorism Authority (NACTA), the Ministry of Information Technology and Telecommunications (MoITT), and other public and private sector stakeholders.

Describing the new policy as a “paradigm shift” in Pakistan’s approach to digital finance, Sumera Azam, Director FIA and lead of the National Working Group, stated, “We are embracing the future — with eyes wide open. The policy proposal seeks to strike a historic balance between technological advancement and national security imperatives.”

The proposed framework directly addresses FATF’s Recommendation 15, which calls for jurisdictions to ensure that VAs and VASPs are not misused for money laundering or terrorism financing. Pakistan’s new policy aims to mitigate these risks while allowing space for innovation through a gradual, adaptive regulatory approach. It emphasizes controlled experimentation, regulatory sandboxes, and the development of institutional capacity to manage and monitor this emerging sector.

Key goals of the framework include:

Curbing financial crime risks such as money laundering and terrorism financing;
Ensuring financial stability in the face of rapidly evolving digital technologies;
Creating space for innovation through regulatory flexibility and sandbox environments;
Strengthening institutional capabilities for effective oversight and enforcement.

The framework is now set to undergo a comprehensive stakeholder consultation process, followed by legislative procedures and a phased rollout beginning later this year. Once implemented, Pakistan will position itself as a regional leader in the responsible regulation of blockchain-based finance.

Experts view this move as a crucial step in not only meeting Pakistan’s international obligations but also in opening doors for secure digital innovation, investment, and economic growth in the country’s fintech landscape.

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