ISLAMABAD: A major controversy has surfaced over the proposed legislation aimed at bringing cryptocurrency and virtual assets into Pakistan’s legal framework, as no government ministry has stepped forward to take ownership of the bill, it was revealed during a Senate cabinet committee meeting.
The draft Virtual Assets Ordinance, prepared to address the long-standing legal vacuum surrounding digital currencies in Pakistan, seeks to regulate the rapidly growing crypto sector, protect investors, and curb risks such as money laundering and financial fraud.
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However, committee members were informed that the Ministry of Finance remains unaware of key provisions of the bill, raising serious concerns about institutional oversight.
Under the proposed ordinance, all cryptocurrency exchanges and virtual asset service providers operating in Pakistan would be required to obtain licenses. Entities found operating without a license could face up to seven years’ imprisonment and fines of up to Rs100 million.
Senator Saleem Mandviwalla urged that punitive clauses be removed from the bill, arguing that harsh penalties could create implementation challenges. “There is a desire to eliminate punishments from the legislation,” he said during the committee proceedings.
However, sources within the Pakistan Muslim League-Nawaz (PML-N) rejected the proposal, stating that removing penalties would render the law ineffective. “If punishments are withdrawn, anyone will operate without a license, leading to increased corruption,” party sources warned, stressing that deterrent clauses are essential for enforcement.
A key feature of the draft ordinance is the establishment of a Shariah Advisory Committee, which will review and certify crypto-related products in line with Islamic principles, promoting financial inclusion while respecting Pakistan’s religious values.
The ordinance also mandates the segregation of customer assets from company funds and requires licensed firms to maintain a proof-of-reserves system to safeguard public money in case of insolvency.
Licensed entities would be obligated to report to the Federal Board of Revenue (FBR) and comply with tax withholding requirements. Officials believe the legislation would help align Pakistan with Financial Action Task Force (FATF) standards, improving the country’s international financial credibility.
During the committee meeting, Senator Mandviwalla further disclosed that licenses had already been issued to certain entities despite the absence of comprehensive legislation, intensifying concerns over regulatory gaps.
Officials argue that Pakistan has lagged behind regional competitors in regulating digital assets. The proposed ordinance, valid for three months, is seen as a crucial step toward encouraging technological innovation while protecting the public from fraud and financial exploitation.
