Pakistan has taken an important step toward regulating digital assets by launching a new regulatory sandbox, a framework that allows companies to test crypto products under government supervision. The move aims to introduce structure and oversight to a rapidly growing, largely unregulated sector, while also attracting investment and reducing risks associated with unregulated crypto activity.
The initiative, unveiled by the Pakistan Virtual Assets Regulatory Authority (PVARA), is set up as a regulatory “sandbox.” This allows firms to trial crypto services in a controlled, real-world setting under the watch of regulators before seeking full approval.
The Pakistan Virtual Assets Regulatory Authority has formally approved and launched its Regulatory Sandbox for virtual assets.
The Sandbox creates a live, supervised environment for testing real-world use cases including tokenization, stablecoins, remittances, and on- and…
— Pakistan Virtual Assets Regulatory Authority (@PakistanVARA) February 20, 2026
The sandbox will cover practical applications including tokenization, stablecoins, cross-border remittances, and on- and off-ramp systems that let users convert between cash and digital assets. These measures are intended to make virtual assets usable beyond speculative trading.
Tokenization involves converting physical assets like property or commodities into digital tokens on a blockchain. Stablecoins are cryptocurrencies pegged to a fiat currency, such as the US dollar, to maintain a stable value. On- and off-ramp infrastructure enables everyday users to move money between traditional and digital systems, bridging conventional finance and crypto platforms.
The launch comes amid broader efforts by Pakistan to formalize its digital asset sector. In recent months, authorities have focused on regulating crypto rather than banning it, while also exploring digital solutions to reduce reliance on cash.
Earlier this year, Pakistan signed a memorandum of understanding with a firm affiliated with World Liberty Financial, a crypto-based finance platform linked to the family of US President Donald Trump, to explore the use of a dollar-backed stablecoin for cross-border payments, especially in remittances.
