Zafar Iqbal
The introduction of the No Objection Certificate Regulations 2025 marks a significant milestone in Pakistan’s approach to regulating virtual assets. The Regulations provide a formal regulatory perimeter for the domestic crypto ecosystem, which has remained active despite the absence of licensing and legal clarity. By creating a structured framework for Anti-Money Laundering registration and authorization of AML Registered Services, Pakistan acknowledges the strategic potential of its digital economy and the substantial participation of its youth in crypto and fintech adoption.
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The Regulations establish a formalized NOC regime designed to promote controlled innovation, market discipline and technology-aligned commercial activity. A regulated virtual asset market has the potential to enhance fiscal revenues, attract foreign investment, and strengthen supervisory capacity. The policy direction reflects Pakistan’s ambition to become a digitally enabled economy, leveraging its large and tech-savvy population. Formalization of virtual asset services through NOC registration lays the foundation for lawful entry of compliant operators while integrating them into the Financial Monitoring Unit’s AML oversight framework.
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The issuance of these Regulations by the Licensing and Supervision Division of the Pakistan Virtual Asset Regulation Authority represents the first binding mechanism under the Virtual Assets Ordinance 2025. It allows applicants to register for AML purposes, incorporate locally, and eventually apply for a full Virtual Asset Service Provider license. The framework reflects international practices, enabling AML Registered Services after registration but prior to full licensing, creating a phased and controlled onboarding model.
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The Regulations cover broker dealer services, custody services, exchange services and virtual asset derivatives, treating them as non-financial businesses and professions for AML registration. This ensures that high-risk activities enter the formal reporting perimeter from market inception. The framework aligns with FATF Recommendation 15, requiring licensing or registration of all VASPs and effective compliance monitoring systems. Implementation will depend on supervisory capacity, technology adoption, and consistent oversight.
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Detailed governance requirements under the Regulations mandate key individuals including CEO, CFO, compliance officer, MLRO, head of risk management, internal audit, and information security. These positions ensure operational integrity and compliance with international norms observed in jurisdictions such as Singapore, the UAE, and the EU. The Regulations also define controllers as persons holding twenty percent or more voting power or share capital, with disclosure of beneficial ownership required under the Anti-Money Laundering Act 2010. Controller approval prior to AML registration aligns with FATF guidance on transparency.
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Despite these strengths, the Regulations leave gaps that could limit their effectiveness. Experience thresholds, residency requirements, and local presence criteria for key individuals are not defined, creating interpretive ambiguities. Capital adequacy, prudential buffers, and segregation of customer assets are not prescribed, leaving operators and users vulnerable in insolvency or failure scenarios. Travel rule implementation thresholds, blockchain analytics standards, and wallet screening protocols are absent, although mandated in advanced VASP jurisdictions.
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The application process requires submission of Form A1, AML-CFT frameworks, governance documentation, beneficial ownership disclosures, and technical integration details. While administratively sound, statutory service level guarantees for processing timelines would enhance predictability. A sandbox-based fast-track mechanism for low-risk models could accelerate lawful market entry, reflecting best practices in Hong Kong and Japan. The framework’s phased approach allows Pakistan to monitor risk and supervise operators effectively before full licensing, supporting orderly development of the sector.
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Comparative analysis shows that Pakistan’s framework broadly aligns with FATF Recommendation 15 and resembles regulatory regimes in the UAE, Singapore, and the EU. Key elements including fit-and-proper tests, governance obligations, AML-CFT compliance, reporting structures, and outsourcing controls meet global standards. Deviations remain in prudential requirements, cybersecurity standards, operational resilience, safeguarding of customer assets, and cross-border supervisory cooperation, all of which are addressed in mature jurisdictions. Addressing these gaps will be essential to protect consumers and maintain market integrity.
The Government of Pakistan should consider policy enhancements, including capital thresholds, operational resilience requirements, mandatory asset segregation, and explicit safeguarding measures. Integration of blockchain analytics, travel rule compliance, and wallet screening protocols would harmonize domestic standards with international norms. Residency and local presence requirements for key individuals, including MLROs and compliance officers, would strengthen supervisory capacity and improve enforcement outcomes.
Issuance of supervisory guidelines on risk-based monitoring, sanctions screening, technology outsourcing, and governance evaluation would ensure uniform interpretation, reduce regulatory uncertainty, and provide clarity to market participants. Establishing a specialized supervisory unit within PVARA, supported by technical units from FMU, SECP, and SBP, would consolidate oversight expertise and enhance enforcement capability.
The No Objection Certificate Regulations 2025 provide a meaningful baseline for Pakistan’s virtual asset market. They create a structured, lawful, and supervised framework for entry while establishing the foundation for long-term investment, AML compliance, and market discipline. The framework, once complemented with enhancements in prudential safeguards, operational resilience, and supervisory guidelines, positions Pakistan to attract credible domestic and international participants, secure tax revenues, and develop a globally competitive virtual asset ecosystem.
The success of the Regulations will depend on coordinated implementation, continuous refinement, and enforcement capacity. Pakistan now has an opportunity to convert informal crypto activity into a formalized, revenue-generating sector that integrates with the broader financial system, promotes technology adoption, and strengthens investor confidence. By adopting international best practices and closing existing regulatory gaps, Pakistan can emerge as a responsible, innovative, and competitive jurisdiction for virtual asset services, enabling sustainable growth while maintaining compliance with global AML and CFT standards.
