The growing scale of Pakistan’s cryptocurrency market is presenting regulators with the challenge of bringing a largely offshore digital-asset ecosystem into the formal financial system.
Pakistan Virtual Assets Regulatory Authority (PVARA) Chairman Bilal Bin Saqib recently told a Senate committee that around 40 million Pakistanis have crypto-linked accounts. He estimated that Pakistanis hold between $10 billion and $20bn in crypto assets outside the country.
According to Chainalysis’ 2025 Global Crypto Adoption Index, Pakistan ranked third globally in overall crypto adoption, behind India and the United States, while it ranked second in retail activity through centralised crypto services.
A significant portion of the country’s crypto ecosystem has developed outside the traditional financial system and remains inconsistent with existing State Bank of Pakistan regulations.
Pakistani users can access international cryptocurrency platforms, purchase stablecoins such as USDT and transfer funds through local payment channels to acquire digital assets held in offshore accounts. Users can also hold assets in overseas or self-custodied wallets, transfer them internationally and increasingly use them for payments.
The emergence of crypto-funded international payment cards has further blurred the distinction between digital assets and conventional financial services. Companies such as RedotPay and Fasset have developed services that allow users to link digital assets to payment cards and make purchases through international payment networks.
The exact number of Pakistani customers using such services is not publicly available. Therefore, specific estimates of the number of users should be treated cautiously. However, the reported scale of crypto-linked accounts and the estimated $10bn-$20bn in assets indicate a substantial potential market for digital-asset services operating outside Pakistan.
A Pakistani user can purchase USDT from another individual, transfer it to an international crypto platform or private wallet and use a foreign-issued virtual card to pay for goods and services. In such transactions, the consumer, crypto platform, blockchain network, card provider and merchant may all be located in different jurisdictions.
This creates a regulatory challenge because no single authority necessarily controls the entire transaction.
Governments can regulate domestic banks, payment companies, crypto exchanges and businesses providing fiat-to-crypto or crypto-to-fiat services. They can also require locally operating virtual-asset businesses to conduct customer identification, monitor transactions, maintain records and report suspicious activity.
However, regulating access to global digital-asset networks is more complicated because users can interact with offshore platforms and blockchain applications from within Pakistan.
Pakistan has responded by establishing PVARA and introducing a licensing framework for Virtual Asset Service Providers.
Companies seeking to provide virtual-asset services in Pakistan are required to enter the regulatory framework, establish an appropriate local presence and comply with requirements covering know-your-customer (KYC) procedures, anti-money laundering and combating the financing of terrorism (AML/CFT), transaction monitoring and record-keeping.
The framework could provide an opportunity for international cryptocurrency companies to formally enter the Pakistani market and operate under domestic regulatory oversight.
However, regulators face another question: why would existing crypto users shift from offshore platforms to regulated domestic services?
Greater KYC requirements, transaction monitoring and tax transparency are important elements of a regulated financial system, but they can also create additional compliance requirements for users accustomed to offshore services.
PVARA’s broader challenge may therefore extend beyond issuing licences. Preventing individuals from accessing offshore wallets, exchanges and blockchain applications through the internet is considerably more difficult than regulating companies operating within Pakistan.
A sustainable regulatory approach could require the domestic ecosystem to offer users practical advantages, including convenient conversion between rupees and digital assets, integration with banks and payment systems, competitive transaction costs, consumer protection and effective dispute-resolution mechanisms.
PVARA now has an opportunity to bring a large existing digital-asset market into Pakistan’s formal financial system. The effectiveness of the framework, however, will depend not only on enforcement but also on whether regulated services can provide sufficient benefits and convenience to encourage existing crypto users to participate in the formal ecosystem.
