Pakistan Advances Digital Asset Regulation With Crypto Sandbox

Pakistan has launched a regulatory sandbox to test crypto products under official supervision as authorities move to formalize oversight of the digital asset sector.

Key Takeaways

• PVARA has launched a regulatory sandbox allowing firms to test crypto services under supervision before full approval.
• The framework covers tokenization, stablecoins, remittances, and on and off ramp systems.
• Pakistan recently signed an MoU to explore dollar linked stablecoin payments for cross border transfers.
• The initiative signals a broader push to regulate digital assets while attracting investment and reducing cash reliance.

What Happened?

The Pakistan Virtual Assets Regulatory Authority, or PVARA, confirmed on February 20, 2026 that it has formally approved and launched a Regulatory Sandbox for virtual assets. The framework creates a controlled environment where companies can trial crypto related products under regulatory oversight before receiving full authorization.

Officials say detailed guidelines and the application process will be published on the authority’s website soon, providing further clarity for firms interested in participating.

PVARA Opens Controlled Testing for Crypto Firms

Under the new framework, businesses can test services in a live but supervised setting. The sandbox is designed to support practical use cases that move beyond speculative trading.

According to PVARA, the sandbox will focus on:

• Tokenization of real world assets
• Stablecoin issuance and payments infrastructure
• Cross border remittances
• On and off ramp systems connecting fiat and digital assets

PVARA said in a post on X:

By introducing supervised experimentation, regulators aim to monitor risks while giving innovators room to build.

Part of a Broader Regulatory Push

The sandbox comes as Pakistan increases efforts to formalize its digital asset sector. In recent months, authorities have signaled that the country intends to regulate crypto activity rather than impose a blanket ban.

Officials are also exploring digital currency initiatives as part of broader measures to reduce cash usage and modernize the financial system. The goal is to strengthen oversight while encouraging responsible innovation and attracting international investment.

By offering a structured testing phase, regulators can assess compliance standards, consumer protection measures, and operational risks before granting full approval. This approach mirrors regulatory models adopted in other financial hubs.

Stablecoin Cooperation and International Engagement

Earlier this year, Pakistan signed a memorandum of understanding with SC Financial Technologies, described as an affiliated entity of World Liberty Financial, a crypto based platform launched in September 2024 and linked to the family of US President Donald Trump.

According to PVARA, the agreement sets the foundation for cooperation on regulated stablecoin payment systems, particularly for cross border transfers. A Reuters report noted that the partnership aims to explore the use of a dollar linked stablecoin for international payments and remittances.

Bilal bin Saqib, Chairman of PVARA, also attended the World Liberty Forum at Mar a Lago in Florida. The gathering brought together financial executives, crypto innovators, and policymakers to discuss stablecoins, tokenization, and the future of digital finance. Representatives from Goldman Sachs, Nasdaq, Franklin Templeton, and Coinbase participated in the discussions.

The launch of the sandbox now provides a domestic platform to test similar innovations within Pakistan under official supervision.

CoinLaw’s Takeaway

In my view, this is a meaningful shift for Pakistan. For years, uncertainty held back the local crypto sector. Now, with a formal regulatory sandbox in place, I see a clearer path for startups and global firms to build responsibly.

In my experience, markets grow stronger when regulators and innovators work together rather than against each other. If Pakistan follows through with transparent guidelines and strong oversight, this move could boost investor confidence and position the country as a serious player in digital finance.

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