Pakistan Crypto Regulation Transformation: How 2025 Legalization Changed the Game

For years, owning Bitcoin or Ethereum in Pakistan felt like living in a legal gray zone. Banks blocked transactions. Exchanges shut down. People used peer-to-peer apps and cash trades just to hold digital assets. Then, in 2025, everything flipped. The State Bank of Pakistan didn’t just soften its stance-it reversed it entirely. By September, crypto was legal. Not just tolerated. Not just ignored. Officially, legally, legalized.

From Ban to Bill: The 2025 Turning Point

It started with silence. Since 2018, the State Bank of Pakistan had warned banks not to touch crypto. No accounts. No transfers. No exchanges. But underground markets kept growing. By 2024, Pakistan’s crypto market was worth over $21 billion-money moving outside the formal economy, untaxed, untracked, unregulated. The government couldn’t ignore it anymore.

In May 2025, the Pakistan Digital Assets Authority (PDAA) got the green light. By June, a technical committee formed-Finance Ministry, SBP, SECP, Law, and IT-tasked with writing the rules. On July 8, President Asif Ali Zardari signed the Virtual Assets Bill 2025 into law by ordinance. It didn’t just lift the ban. It created a new regulator: the Pakistan Virtual Asset Regulatory Authority, or PVARA.

PVARA wasn’t a token office. It was built to be powerful. Its job? License every crypto exchange, wallet provider, and trading platform. Enforce anti-money laundering rules. Track suspicious transfers. Prevent fraud. And most importantly-make sure no one could use crypto to bypass Pakistan’s strict capital controls.

What’s Allowed? What’s Not?

Legal doesn’t mean free. Pakistan didn’t go full El Salvador. You can’t walk into a grocery store in Lahore and pay with Bitcoin. You can’t trade Dogecoin on a local app like you would stocks. The rules are tight.

• Allowed: Holding crypto. Transferring it between wallets. Sending it overseas as remittances through licensed platforms.
• Not Allowed: Using crypto to buy goods or services. Open trading of altcoins. Crypto ATMs. Decentralized finance (DeFi) platforms. Any unlicensed exchange.

The only crypto payment system you can legally use? The Digital Pakistani Rupee (Digital PKR)-a state-controlled CBDC. Think of it like digital cash, but every transaction is logged, tracked, and monitored by the State Bank. No anonymity. No decentralization. Just a government-run version of what Bitcoin promised.

This isn’t about freedom. It’s about control. The government wants to capture the $21 billion that’s already flowing through underground channels. They want to tax it. Track it. Regulate it. But they don’t want you to build a crypto economy outside their system.

How It Compares to the Rest of the World

Pakistan’s model is unique. It’s not like the U.S., where you can buy Bitcoin on Coinbase and trade it on Binance. It’s not like the UAE, where Dubai has crypto hubs and tax-free zones for blockchain startups. And it’s not like India, where you pay 30% tax but can trade freely.

Pakistan’s approach is closer to China’s-except China banned all private crypto. Pakistan lets you hold it, just not use it. That’s the twist. You’re not breaking the law by owning Ethereum. But if you try to pay your electric bill with it? You’re in trouble.

This makes Pakistan an outlier in South Asia. India taxes crypto but lets people trade. The UAE invites crypto firms with visas and licenses. Pakistan says: “We see you. We’re watching. And we’re the only ones who can issue digital money.”

Who Benefits? Who Gets Left Behind?

The winners? Remittance companies. Pakistan gets over $30 billion in remittances every year from workers abroad. Sending money through Western Union or MoneyGram costs 5-8%. With licensed crypto platforms, that could drop to 1-2%. PVARA is pushing partnerships with platforms that specialize in cross-border crypto-to-fiat transfers. That’s a real win for families relying on money from the Gulf or the UK.

Fintech startups with government backing also have a clear path. If you’re building a wallet that connects to the Digital PKR, you get a license. If you’re building a DeFi app? No chance.

The losers? Everyday crypto users who wanted freedom. People who bought Bitcoin in 2021 hoping to use it as a hedge against inflation. Now they can hold it-but they can’t spend it. They can’t trade it easily. They can’t earn interest on it. The market is open, but the doors are locked.

Reddit threads in Karachi and Lahore are full of frustration. “They legalized it so they can tax it,” one user wrote. Another: “I waited seven years for this. Now I can’t even buy a coffee with my Bitcoin.”

The Real Challenge: Implementation

Legalizing crypto is one thing. Making it work is another.

PVARA needs to hire dozens of tech-savvy regulators-people who understand blockchain, smart contracts, and wallet addresses. They need to build a real-time monitoring system. They need to train banks to spot crypto-related transactions. They need to create licensing portals that aren’t overloaded with applications.

And then there’s the Digital PKR. It’s not just a digital rupee. It’s a complete overhaul of how money moves in Pakistan. The State Bank is working with international partners to build the backend. Pilot programs are set to launch in early 2026. But integrating it with millions of unbanked users? That’s a massive hurdle.

Most people in Pakistan still use cash. Even those with bank accounts rarely use digital payments. Getting them to adopt a government-run digital currency won’t be easy. Especially when they’ve already seen how quickly regulations can change.

What Comes Next?

By the end of 2025, PVARA had licensed five crypto service providers. All of them focused on remittances. None offered trading. The Digital PKR pilot was running in three cities with 10,000 test users. The Senate is still reviewing the full bill, but the core rules are already in force.

The big question isn’t whether crypto is legal in Pakistan anymore. It’s whether it will ever be useful.

If the government slowly opens up-letting people trade on licensed exchanges, allowing stablecoin use for remittances, maybe even letting businesses accept crypto under strict limits-then this could evolve into something real.

But if the restrictions stay locked in place? Then this 2025 pivot won’t be a revolution. It’ll just be another way for the state to monitor what was already happening in the shadows.

For now, Pakistan’s crypto future isn’t written in code. It’s written in policy. And right now, the policy says: You can own it. But you can’t use it. And that’s the tightrope they’re walking.