How to get a virtual asset licence in Pakistan: step-by-step guide to PVARA compliance

Important note. As PVARA is newly established, specific regulatory requirements and processes continue to evolve. This guide reflects current understanding based on available information and the Virtual Assets Act, 2026. Prospective licensees should obtain current, authoritative information directly from PVARA and qualified legal counsel before making business decisions.

Understanding PVARA: Pakistan's virtual asset regulatory framework

The Pakistan Virtual Assets Regulatory Authority (PVARA) was first created by the Virtual Assets Ordinance, 2025. The Virtual Assets Act, 2026 now establishes it in statute and sets out its licensing and supervisory powers. Under Section 5(3) of the Act, regulation of virtual assets vests primarily in PVARA, in coordination with other regulators, and its AML/CFT supervision is aligned with FATF standards.

PVARA's core mandate spans four areas: licensing and supervision of all VASPs; AML/CFT enforcement aligned with FATF Recommendations; investor protection and market integrity; and innovation support through a regulatory sandbox. Its regulatory powers include licensing and revoking VASP authorisations, conducting investigations and audits, imposing fines and disciplinary actions, setting technical standards, and coordinating with international regulatory bodies.

Who needs a PVARA licence?

Any entity providing virtual asset services in or from Pakistan requires PVARA licensing. Businesses already operating when the Act commenced had until 5 September 2026 to apply, according to press reports of PVARA's August 2026 announcement. The following categories are in scope:

Tip. The Act leaves NOC, licensing and supervision fees and the minimum paid-up capital to be prescribed (Sections 22 and 25). We did not find published amounts, so prospective VASPs should budget for application and annual supervisory fees and for capital that supports their operations, and check PVARA directly for current figures.

Phase 1: Pre-application preparation

Most of the work happens before you apply. An application that arrives without a complete compliance infrastructure is likely to be delayed or refused. We did not find a PVARA-published timeline for this phase.

1. Business structure assessment. Obtain the No-Objection Certificate before you incorporate, then establish a company under the Companies Act, 2017 (Sections 19 and 50), define your virtual asset activities and service scope precisely, prepare a detailed business plan and operational framework, and identify key personnel including your MLRO/AML Compliance Officer, a Key Individual for fit-and-proper purposes.

2. Compliance framework development. Develop AML/CFT policies; establish Know Your Customer (KYC) and Customer Due Diligence procedures; create risk management frameworks covering ML/TF/PF risks specific to your business model; and design cybersecurity and data protection protocols meeting PVARA's technical standards.

3. Technical infrastructure setup. Deploy secure virtual asset custody solutions, implement transaction monitoring systems, establish audit trails and reporting capabilities, and meet PVARA's technical standards, including the systems required for Travel Rule compliance at or above prescribed thresholds.

Phase 2: Formal application submission

The application package should be complete at submission, because missing or inadequate documentation can delay the application. The Act leaves the documents to be prescribed (Section 19), so confirm PVARA's current requirements. Based on the Act's requirements, prepare for six categories of documentation:

Corporate information: certificate of incorporation and memorandum of association; shareholder structure and beneficial ownership details; board of directors' profiles and qualifications; organisational chart and management hierarchy.

Business operations: detailed business plan and financial projections; service descriptions and target market analysis; risk assessment and mitigation strategies; operational procedures and internal controls.

Compliance documentation: AML/CFT policies and procedures manual; KYC and customer due diligence frameworks; suspicious transaction reporting protocols; record-keeping and data retention policies.

Technical specifications: IT infrastructure and security architecture; cybersecurity policies and incident response plans; business continuity and disaster recovery procedures; third-party service provider agreements.

Financial information: audited financial statements, if available; capital adequacy documentation; insurance coverage details; fee structure and pricing models.

Personnel documentation: fit-and-proper assessments for all Key Individuals; educational qualifications and professional experience; criminal background checks and integrity certifications; training and competency frameworks.

Phase 3: Regulatory assessment process

Once it receives a complete application, expect PVARA to assess it in the following areas.

Initial review and due diligence: document verification reviewing all submitted materials for completeness and accuracy; background checks on beneficial owners, directors, and senior management; technical assessment evaluating IT infrastructure and security measures; and compliance review assessing AML/CFT frameworks against FATF standards.

On-site inspections. PVARA may conduct physical inspections to verify operational readiness and infrastructure capability, staff competency and training adequacy, compliance system effectiveness, and risk management implementation.

Stakeholder consultation. PVARA coordinates with the State Bank of Pakistan, the Securities and Exchange Commission of Pakistan (SECP), the Financial Monitoring Unit and the Federal Board of Revenue, among others (Section 17). Cross-agency input may extend the assessment timeline.

Industry insight. Contacting PVARA during the assessment, before it sends you queries, can reduce processing time. Designate a senior compliance contact as the single point of contact for all PVARA communications, and respond to information requests within the stated deadline.

Phase 4: Licensing decision and conditions

PVARA may grant a full licence authorising specified virtual asset activities; grant a conditional approval imposing additional requirements or restrictions; issue a provisional or limited-scope licence on a case-by-case basis; request additional information requiring supplementary documentation; or reject the application with written reasons where non-compliance or inadequate preparation is identified.

All licensing decisions are reflected in PVARA's publicly accessible register, showing the entity name, licence number, permitted services, and current status. Licences are granted on terms PVARA considers appropriate, so read every condition attached to yours and build it into your compliance programme.

Ongoing obligations for licensed VASPs

Licensing starts a continuous compliance relationship with PVARA.

Regular reporting obligations will follow what PVARA prescribes. The Act refers to periodic returns and audited financial statements "as may be prescribed" (Section 22), to proof-of-reserves reports at intervals set by Regulations (Section 27(1)), and to an annual audit by an approved chartered accountancy firm that includes verification of customer asset segregation (Section 27(2)). We have not seen monthly, quarterly or annual reporting cycles published, so build your reporting calendar once PVARA issues the Regulations. Expect to report on items such as transaction data, suspicious transaction reports, capital and financial position, and compliance monitoring results.

Supervisory activities include periodic audits examining books, records, and operations; transaction monitoring and surveillance; compliance testing of AML/CFT system effectiveness; and ongoing market surveillance for suspicious or irregular activities.

Common mistake. Some newly licensed VASPs treat the post-licence period as a settling-in phase. PVARA's supervisory framework applies from the date of licensing, so treat every obligation as live from day one.

AML / CFT compliance requirements

Licensed VASPs are deemed financial institutions under Pakistan's AML Act 2010 (Section 46(1) of the Virtual Assets Act, 2026) and inherit the full range of AML obligations. The VASP-specific requirements imposed by the Virtual Assets Act, 2026 apply in addition to those obligations.

Customer Due Diligence (CDD) operates across three tiers: standard CDD for identity verification of all customers; Enhanced CDD for high-risk customers (PEPs, high-risk jurisdictions, unusual transaction patterns); and Simplified CDD for demonstrated low-risk scenarios where Regulations permit. Ongoing monitoring of all customer relationships is mandatory throughout the lifecycle.

Suspicious Activity Reporting: automated detection systems for unusual patterns; documented internal investigation procedures; prompt submission to the Financial Monitoring Unit (FMU) within prescribed timelines; and full record keeping of all reports and underlying documentation.

Sanctions screening must operate in real time against current sanctions lists, with documented procedures for handling matches, regular updates as sanctions regimes evolve, and cross-border coordination protocols for international transactions.

FATF Travel Rule compliance

The Travel Rule is operationally demanding for VASPs. Under Section 47 of the Virtual Assets Act, 2026, licensees must obtain, hold, and transmit originator and beneficiary information for any VA transfer at or above the PVARA-prescribed threshold, consistent with FATF Recommendation 16.

Consumer protection framework

PVARA mandates customer protection obligations that sit alongside the conduct standards in Chapter 7 of the Virtual Assets Act, 2026:

• Segregation of assets: customer VAs and fiat must be held in segregated accounts separate from the licensee's own assets at all times, and they are ring-fenced in insolvency
• No rehypothecation: customer assets may not be lent, pledged, or encumbered without the customer's explicit, informed, revocable written consent
• Complaint resolution: formal internal procedures for customer grievances, with documented escalation paths
• Transparency requirements: clear disclosure of risks, fees, terms, and material information; all marketing must contain prescribed risk disclosures
• Compensation schemes: the Authority may establish a customer-compensation or safeguard mechanism for losses from custodial failure, as prescribed by Regulations (Section 29)

Practical implementation timeline

Note on timelines. We did not find PVARA-published processing times, so we do not give estimates. Duration will depend on application complexity and PVARA's evolving processes. Early engagement with PVARA and a complete application at first submission are the two factors most within your control.

Common challenges and how to address them

• Complex compliance requirements: engage experienced compliance professionals familiar with FATF standards and Pakistan's regulatory environment before you begin the application, so that you are not fixing gaps after a deficiency notice.
• Technical infrastructure costs: consider phased implementation and partnerships with established technology providers for transaction monitoring and Travel Rule compliance systems.
• Regulatory uncertainty: maintain active engagement with PVARA and industry associations for guidance updates; build flexibility into compliance systems from the outset so they can adapt without full rebuilds.
• Cross-border operational complexity: develop clear policies for international transactions and understand how PVARA defines Pakistani nexus for regulatory purposes before launching cross-border services.
• Regulatory precedent uncertainty: study international best practices from comparable jurisdictions (UAE VARA, MiCA, MAS) and adopt conservative compliance positions until local precedents are established.
• Early adopter risks: engage proactively with PVARA during the implementation phase; document all regulatory interactions and keep complete records of compliance decisions and their rationale.

Staying current with PVARA developments

Given PVARA's recent establishment, staying current on regulatory developments is a compliance obligation in itself.

Regulatory monitoring strategy: monitor PVARA's official communications and published guidance; engage with the Pakistan Crypto Council and relevant trade organisations; subscribe to legal advisories focused on Pakistani financial services regulation; and track PVARA's engagement with global regulatory bodies and FATF standard-setting organisations.

Risk management for early licensees: adopt compliance standards that exceed minimum requirements where regulatory guidance is ambiguous; keep complete records of all regulatory interactions and decisions; build relationships with regulators, peers, and industry advisors early; and develop contingency scenarios for potential regulatory changes or enforcement actions.

International coordination considerations: understand how PVARA defines Pakistani nexus for regulatory purposes, particularly for businesses serving Pakistani users from outside Pakistan. Section 4 of the Act lets PVARA exercise its powers extraterritorially for investigation and enforcement, and Regulations will set when offshore services count as offered to persons in Pakistan. Monitor PVARA's memorandums of understanding with foreign regulators and prepare for potential conflicts between Pakistani and international compliance requirements.

Industry insight. A firm that obtained registration under the 2025 Ordinance but has not updated its compliance programme to reflect the Virtual Assets Act, 2026 is exposed. The Act sets detailed requirements on AML, custody, consumer protection and market conduct, and Section 74 treats approvals granted under the Ordinance as valid under the Act. A gap assessment against the Act is the immediate priority for existing registrants.