Pakistan invites global crypto firms to apply for operating licenses: Report
News Summary
Pakistan has opened its doors to international crypto businesses, inviting leading exchanges and Virtual Asset Service Providers (VASPs) to apply for licenses under a new federal regime. Bilal bin Saqib, PVARA Chair and Minister of State for Crypto and Blockchain, stated this initiative aims to partner with the world's leading VASPs to build a transparent and inclusive digital financial future for Pakistan. Eligibility is limited to firms already licensed by recognized regulators, including the US SEC, UK FCA, EU VASP framework, UAE's VARA, and the Monetary Authority of Singapore. PVARA indicates the framework seeks to curb illicit finance while unlocking opportunities in fintech, remittances, and tokenization, including Shariah-compliant products via regulatory sandboxes. Pakistan ranks third in Chainalysis' 2025 Global Crypto Adoption Index and had previously announced plans for a government-led Bitcoin Strategic Reserve and earmarked 2,000 megawatts of surplus electricity for Bitcoin mining and AI centers. However, the International Monetary Fund (IMF) expressed concerns in July regarding Pakistan's plan to offer subsidized power for crypto mining.
Background
The Pakistan Virtual Asset Regulatory Authority (PVARA) was established under the Virtual Assets Ordinance 2025, tasked with licensing, regulating, and supervising VASPs in line with standards set by the Financial Action Task Force (FATF), International Monetary Fund (IMF), and World Bank. Pakistan surged to third place in Chainalysis’ 2025 Global Crypto Adoption Index, emerging as one of the world’s fastest-growing crypto markets. The country had previously announced plans in May 2025 to establish a government-led Bitcoin Strategic Reserve and earmarked 2,000 megawatts of surplus electricity for Bitcoin (BTC) mining and AI centers. Despite these pro-crypto initiatives, the International Monetary Fund (IMF) expressed concerns in July regarding Pakistan’s proposal to offer subsidized power to energy-intensive industries, including Bitcoin miners.
In-Depth AI Insights
Why is Pakistan aggressively embracing crypto despite IMF concerns? - Economic Development & Financial Inclusion: Pakistan seeks to leverage fintech, remittances, and tokenization to drive economic growth and enhance financial inclusion, viewing digital assets as a key enabler. - Utilizing Surplus Energy: With 2,000 megawatts of surplus electricity, allocating it to Bitcoin mining and AI centers provides a revenue stream and transforms an energy surplus into a strategic asset. - Enhancing International Standing & Compliance: By establishing a strict regulatory framework and inviting recognized international firms, Pakistan aims to demonstrate its commitment to combating illicit finance, potentially improving its standing with international bodies like FATF. - Attracting Foreign Investment: The invitation to leading global VASPs is designed to attract direct foreign investment, technology, and expertise, further stimulating the indigenous digital economy. What are the potential opportunities and risks for international crypto firms entering Pakistan's market? - Opportunities: - Large, Untapped Market: Pakistan's high and rapidly growing crypto adoption offers international firms a chance to gain first-mover advantage in a significant emerging market. - Regulatory Clarity: The new federal regime and PVARA provide a clearer regulatory framework than many emerging markets, reducing operational uncertainty. - Shariah-Compliant Products: Regulatory sandboxes may allow for the development and launch of innovative, Shariah-compliant digital asset products, appealing to specific investor segments. - Risks: - Evolving Regulatory Landscape: Despite the framework, policies may be subject to frequent adjustments due to pressure from international bodies like the IMF, creating uncertainty. - Macroeconomic Challenges: As an emerging market, Pakistan may face macroeconomic headwinds such as currency volatility, political instability, and infrastructure limitations. - Profitability vs. Compliance Costs: Strict entry criteria and compliance requirements could lead to high operational costs, with the ultimate market size and profitability yet to be fully proven. How might Pakistan's pro-crypto stance influence the broader regional or global digital asset landscape? - Regional Demonstration Effect: Pakistan's successful implementation could serve as a model for other emerging markets seeking to balance innovation and regulation, particularly in the Middle East and Africa. - Global Regulatory Competition: As nations compete to attract digital asset investment, Pakistan's aggressive strategy highlights a global race in crypto regulation and innovation. - Impact on IMF and World Bank: If Pakistan successfully implements its strategy and demonstrates its benefits, it could influence future IMF and World Bank recommendations on digital asset policies, prompting a re-evaluation of their stance towards crypto in emerging markets.