Senate passes bill to regulate virtual assets as presidential ordinance expires

The Senate recently passed a bill aimed at regulating virtual assets and the establishment of the Pakistan Virtual Assets Regulatory Authority (PVARA) as an ordinance was set to lapse in early March. Finance Minister Muhammad Aurangzeb introduced the bill for immediate consideration in the Senate, suspending the rules to prioritize its discussion.

The bill focuses on the necessity to establish a regulatory authority to license, regulate, and supervise virtual assets and service providers to ensure investor protection, market integrity, and transparency in Pakistan. It aims to create a dedicated body empowered to combat money laundering, terrorist financing, proliferation financing, and other illicit activities related to virtual assets in accordance with international standards.

The legislation envisions the Pakistan Virtual Asset Regulatory Authority as an autonomous corporate entity responsible for licensing, regulation, and supervision of virtual asset service providers and issuers within the country. The bill outlines the functions of the authority, emphasizing safeguarding customers, investors, market integrity, and preventing illicit use of virtual assets. Moreover, PVARA aims to attract investment, promote responsible innovation, and encourage companies operating in the virtual asset sector to establish their businesses in Pakistan.

Additionally, PVARA is tasked with promoting, developing, governing, and regulating the adoption and use of blockchain technology and distributed ledger technology across Pakistan. The authority is mandated to coordinate with relevant agencies and law enforcement to combat money laundering, terrorist financing, and other illicit activities associated with virtual assets in compliance with existing laws and international standards.

Furthermore, PVARA is authorized to develop regulations, standards, guidelines, and directives consistent with the objectives of the legislation. It can set risk-management, cybersecurity, data protection standards, and monitor compliance through inspections. The authority may impose administrative sanctions and levy fees or penalties on entities in violation of the law.

Additionally, PVARA will operate regulatory sandboxes transparently and cooperate with domestic and foreign regulators to facilitate information sharing. The bill outlines the composition of the authority, including a chairperson appointed by the federal government, representatives from relevant ministries, the State Bank of Pakistan, the Securities and Exchange Commission of Pakistan, and other key stakeholders with expertise in virtual asset markets and digital finance.

Ultimately, the bill aims to establish a robust regulatory framework for virtual assets in Pakistan, ensuring compliance with international standards while promoting innovation, transparency, and market integrity.