Dr. Ikramul Haq & Abdul Rauf Shakoori
Pakistan’s steps to legalize crypto have been hesitant, secretive, and inconsistent. For years, the state discouraged or imposed an absolute ban on crypto activity, only to later pivot toward regulation without any meaningful public debate. The Pakistan Virtual Assets Ordinance, 2025, was quietly promulgated on July 8, 2025 with no meaningful consultation, and now the proposed Pakistan Virtual Assets Regulatory Authority (PVARA) Bill is moved without the draft shared for open debate, experts’ opinion and/or public consultation.
The government, instead of maintaining transparency, has preferred secrecy, treating digital assets as a matter to be controlled rather than an industry to be mobilized to achieve the desired results. The State Bank’s intention to apply the Foreign Exchange Regulation Act (FERA) to digital assets, including a cap of US$100,000 on annual outbound transfers, reflects this mindset. Rather than designing rules fit for blockchain-based finance, policymakers are forcing crypto into outdated fiat-era frameworks, revealing an instinct for restriction over innovation.
The US$100,000 cap is the most troubling element of the proposed law. It treats digital assets like ordinary remittances, ignoring their unique structure, and attempts to police an industry that does not move neatly through traditional banking channels. In practice, enforcing such a cap will be impossible. Distributed ledgers and peer-to-peer transfers cannot be monitored like wire transfers, and the burden of compliance will fall on exchanges and intermediaries that risk being pushed out of the country. The consequence will not be control but rather the creation of unregulated spaces where the risks of money laundering and fraud only increase.
The Ordinance and the Bill further show how power is being centralized in the new authority, with vague clauses leaving wide discretion to regulators. The broader public remains excluded from shaping a framework that will govern billions of dollars in investment and savings. Authorities appear determined to build the entire regime around capital control rather than regulatory clarity. This approach, far from fostering confidence, sends a signal to innovators and investors that Pakistan is less interested in building a market than in restricting one.
Global practice shows there are better ways to regulate cryptocurrency. Countries that have legalized or regulated crypto successfully do not impose blanket annual transfer caps. However, they use a mix of licensing, AML/CFT rules, and compliance with the FATF travel rules to supervise the industry without suffocating it. El Salvador, which made Bitcoin legal tender in 2021, has not placed annual limits on crypto transfers, but it has focused instead on integrating Bitcoin into its economy through national wallets and tax exemptions.
Japan operates under the Payment Services Act, requiring crypto service providers to be licensed and follow strict AML rules, but it again imposes no blanket annual transfer cap. Singapore, under its Payment Services Act, supervises exchanges with licensing and AML obligations, relying on the travel rule for reporting.
Switzerland has long been considered one of the most crypto-friendly jurisdictions, with its FINMA framework combining DLT recognition and AML supervision without imposing ceilings on cross-border crypto transfers. The UAE, through its Abu Dhabi and Dubai frameworks, actively licenses and supervises crypto firms, enforcing FATF-style rules without capping transfers. The United States, where crypto is treated as property for tax purposes, regulates exchanges under FinCEN with AML and travel-rule obligations, but does not impose any annual ceiling but it enforces reporting thresholds such as the longstanding $3,000 travel-rule trigger for information sharing.
Pakistan is reaching for blunt instruments that neither suit the technology nor serve the economy. By capping transfers at US$100,000 annually, where others that regulate through clarity, supervision, and risk-based rules. The government risks driving innovation and capital abroad while gaining little in return. Unfortunately, the proposed law confuses crypto regulation with foreign-exchange reserve management, as though treating Bitcoin or stablecoins like dollar remittances will secure the country’s reserves. However, such rules are unenforceable and will only push legitimate actors to offshore exchanges and informal markets.
The State Bank’s ambition to launch digital currency makes the contradiction more obvious. On one hand, it is promising innovation by introducing a state-backed digital asset. On the other hand, it is building a framework that makes it nearly impossible for private crypto markets to operate freely. State Bank digital currency cannot succeed in an environment where private players, who build liquidity, infrastructure, and adoption, are suffocated by arbitrary limits.
The alternatives are already on the table and well understood. Licensing of exchanges and custodians, mandatory AML/CFT programmes, enforcement of the FATF travel rule, clear tax treatment, consumer-protection measures, and international cooperation are the core elements of successful frameworks globally. Pakistan can adopt targeted tools to address risks, such as requiring foreign platforms serving Pakistani clients to establish local offices, mandating transaction reporting above set thresholds, and introducing regulatory sandboxes to test new models. These measures would give regulators visibility into the market without strangling it.
The argument often made in defense of harsh restrictions is the need to protect Pakistan’s fragile foreign-exchange reserves. That concern is valid, but it cannot be addressed by caps that are unenforceable in practice. Protecting reserves requires policies that keep activity onshore and transparent.
Licensed exchanges could be required to settle conversions through designated FX windows at the State Bank of Pakistan, ensuring oversight of large flows. Similarly, conversion taxes or reporting requirements for major transfers could capture data and revenue without blocking the market. Additionally, incentivizing investors to use regulated platforms would ensure reserves are monitored, rather than drained silently through informal channels.
The way ahead is following the regulations by design, not stealth bans. A transparent, consultative process that publishes the draft PVARA Bill, invites public comment, and aligns with international best practice would create a framework that supports innovation while preserving oversight. Similarly, strong AML/CFT rules, effective supervision of service providers, international cooperation, and consumer-protection mechanisms will do more to protect Pakistan’s economy and reputation than a poorly conceived annual transfer cap.
The country stands at a crossroads. One path is secrecy, arbitrary limits, and a flight of capital and innovation. The other is openness, smart regulation, and a chance to build a credible place in the global digital economy. The choice should be obvious, but it will require Pakistan’s policymakers to abandon the instinct for control and embrace the challenge of regulation that is firm yet enabling. Only then can Pakistan move beyond empty declarations of leadership in crypto and build the trust and infrastructure needed to lead.
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Dr. Ikramul Haq, Advocate Supreme Court, specializes in constitutional, corporate, media, environment, ML/CFT related laws, IT, intellectual property, arbitration and international tax laws. He holds LLD in tax laws with specialization in transfer pricing.
He was full-time journalist from 1979 to 1984 with Viewpoint and Dawn. He served Civil Services of Pakistan from 1984 to 1996. He established Huzaima & Ikram in 1996 and is presently its chief partner. He studied journalism, English literature and law. He is Chief Editor of Taxation. He is country editor and correspondent of International Bureau of Fiscal Documentation (IBFD) and member of International Fiscal Association (IFA). He is Visiting Faculty at Lahore University of Management Sciences (LUMS) and member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE).
He has coauthored with Huzaima Bukhari many books that include Tax Reforms in Pakistan: Historic & Critical Review, Towards Flat, Low-rate, Broad and Predictable Taxes (revised & Expanded Edition, Pakistan: Enigma of Taxation, Towards Flat, Low-rate, Broad and Predictable Taxes (revised/enlarged edition of December 2020), Law & Practice of Income Tax, Law , Practice of Sales Tax, Law and Practice of Corporate Law, Law & Practice of Federal Excise, Law & Practice of Sales Tax on Services, Federal Tax Laws of Pakistan, Provincial Tax Laws, Practical Handbook of Income Tax, Tax Laws of Pakistan, Principles of Income Tax with Glossary and Master Tax Guide, Income Tax Digest 1886-2011 (with judicial analysis).
He is author of Commentary on Avoidance of Double Taxation Agreements, Pakistan: From Hash to Heroin, its sequel Pakistan: Drug-trap to Debt-trap and Practical Handbook of Income Tax. Two books of poetry are Phull Kikkaran De (Punjabi 2023) and Nai Ufaq (Urdu 1979 with Siraj Munir and Shahid Jamal).
He regularly writes columns/article/papers for many Pakistani newspapers and international journals and has contributed over 2500 articles on a variety of issues of public interest, printed in various journals, magazines and newspapers at home and abroad.
X (formerly Twitter): DrIkramulHaq
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Abdul Rauf Shakoori, Advocate High Court, is a subject-matter expert on AML-CFT, Compliance, Cyber Crime and Risk Management. He has been providing AML-CFT advisory and training services to financial institutions (banks, DNFBPs, Investment companies, Money Service Businesses, insurance companies and securities), government institutions including law enforcement agencies located in North America (USA & CANADA), Middle East and Pakistan.
His areas of expertise include legal, strategic planning, cross border transactions including but not limited to joint ventures (JVs), mergers & acquisitions (M&A), takeovers, privatizations, overseas expansions, USA Patriot Act, Banking Secrecy Act, Office of Foreign Assets Control (OFAC).
Over his career he has demonstrated excellent leadership, communication, analytical, and problem-solving skills and have also developed and delivered training courses in the areas of AML/CFT, Compliance, Fraud & Financial Crime Risk Management, Bank Secrecy, Cyber Crimes & Internet Threats against Banks, E–Channels Fraud Prevention, Security and Investigation of Financial Crimes. The courses have been delivered as practical workshops with case study driven scenarios and exams to insure knowledge transfer.
His notable publications are: Rauf’s Compilation of Corporate Laws of Pakistan, Rauf’s Company Law and Practice of Pakistan and Rauf’s Research on Labour Laws and Income Tax and others.
His articles include: Revenue collection: Contemporary targets vs. orthodox approach, It is time to say goodbye to our past, US double standards, Was Due Process Flouted While Convicting Nawaz Sharif?, FATF and unjustly grey listed Pakistan, Corruption is no excuse for Incompetence, Next step for Pakistan, Pakistan’s compliance with FATF mandates, a work in progress, Pakistan’s strategy to address FATF Mandates was Inadequate, Pakistan’s Evolving FATF Compliance, Transparency Curtails Corruption, Pakistan’s Long Road towards FATF Compliance, Pakistan’s Archaic Approach to Addressing FATF Mandates, FATF: Challenges for June deadline, Pakistan: Combating the illicit flow of money, Regulating Crypto: An uphill task for Pakistan. Pakistan’s economy – Chicanery of numbers. Pakistan: Reclaiming its space on FATF whitelist. Sacred Games: Kulbhushan Jadhav Case. National FATF secretariat and Financial Monitoring Unit. The FATF challenge. Pakistan: Crucial FATF hearing. Pakistan: Dissecting FATF Failure, Environmental crimes: An emerging challenge, Countering corrupt practices .
X (formerly Twitter): Adbul Rauf Shakoori
The recent publication, coauthored by these writes with Huzaima Bukhari is:
Pakistan Tackling FATF: Challenges & Solutions, available at:
https://aacp.com.pk/book-detail/pakistan-tackling-fatf-challenges-and-solutions-35
https://www.amazon.com/dp/B08RXH8W46