SECP's Role in Pakistan's Virtual Asset Regulation: A Guide for Operators

Operating a virtual asset business in Pakistan means navigating a complex regulatory landscape. While the Pakistan Virtual Assets Regulatory Authority (PVARA) is emerging as the primary regulator for virtual asset service providers (VASPs), the Securities and Exchange Commission of Pakistan (SECP) remains a foundational authority. Every company in Pakistan, including those dealing with virtual assets, must first register with the SECP.

This dual oversight means that even as PVARA develops its specific rules for virtual assets, your business must still adhere to the established corporate governance and company law frameworks overseen by the SECP. Understanding this interplay is crucial for ensuring your operations are not only compliant with future virtual asset regulations but also legally sound from a corporate perspective today.

For operators, this means considering the SECP’s requirements from the very outset of forming a virtual asset venture. From company registration to ongoing financial reporting and director responsibilities, the SECP’s long-standing regulatory framework provides the bedrock upon which all other virtual asset-specific rules will build.

What is the SECP’s role in Pakistan’s virtual asset landscape?

The Securities and Exchange Commission of Pakistan (SECP) is the primary corporate regulator in Pakistan, responsible for overseeing the corporate sector, capital markets, and non-banking financial institutions. For virtual asset businesses, the SECP’s role involves company registration, corporate governance, financial reporting, and ensuring compliance with general company law, irrespective of the specific virtual asset activities.

The SECP’s mandate covers the legal formation and ongoing administration of all companies operating within Pakistan. This includes virtual asset service providers (VASPs), which must be incorporated as legal entities to conduct business. While the specific licensing and operational rules for virtual assets are being developed by PVARA, the foundational requirement for a company to exist and operate legally falls under the SECP. This means that any entity looking to engage in virtual asset activities, such as exchanges, custodians, or wallet providers, must first register with the SECP as a company. The SECP ensures that these entities adhere to established corporate standards, including those related to shareholder rights, board responsibilities, and financial transparency.

How does company law apply to virtual asset businesses?

Company law applies to virtual asset businesses by requiring them to be formally registered legal entities, adhering to rules on incorporation, corporate governance, financial reporting, and director duties. These requirements ensure transparency, accountability, and a structured operational framework, regardless of the innovative nature of their virtual asset services.

For any virtual asset business to operate legally in Pakistan, it must first be incorporated under the Companies Act. This process involves registering with the SECP and complying with various requirements for company formation. These include:

• Name Reservation: Ensuring the proposed company name is unique and available.
• Memorandum and Articles of Association: Defining the company’s objects, powers, and internal regulations.
• Share Capital: Specifying the authorised and paid-up capital.
• Registered Office: Providing a physical address for official communications.

Once incorporated, virtual asset companies are subject to ongoing obligations under company law. These include maintaining proper books of accounts, conducting annual general meetings, filing annual returns, and adhering to strict corporate governance standards. These standards are designed to protect stakeholders, ensure responsible management, and promote ethical business practices within the corporate sector.

What is the relationship between SECP and PVARA?

The SECP and PVARA share a complementary relationship, with SECP handling corporate registration and general company law compliance, while PVARA focuses on the specific licensing and operational regulation of virtual asset activities. PVARA’s emerging framework builds upon the corporate foundation established by the SECP, ensuring a holistic regulatory approach.

The regulatory framework for virtual assets in Pakistan is currently under development, with PVARA designated as the specialised regulator for this sector. However, the SECP’s role as the corporate watchdog remains paramount. Any company, including a VASP, must first be incorporated and comply with the general corporate laws enforced by the SECP. PVARA’s regulatory scope, as outlined in its mandate, will then overlay these corporate requirements with specific rules for virtual asset operations. This includes aspects such as VASP licensing, anti-money laundering (AML) and combating the financing of terrorism (CFT) measures, and consumer protection.

This layered approach means that a virtual asset operator will interact with both regulators. The SECP will ensure the company’s corporate health and compliance, while PVARA will oversee the specific virtual asset services offered. This ensures that virtual asset businesses are not only compliant with their specialised industry rules but also operate within a robust corporate governance framework. You can learn more about what PVARA is and its role in shaping the virtual asset space.

Which types of virtual asset businesses fall under SECP’s purview?

All virtual asset businesses that operate as incorporated entities in Pakistan fall under the SECP’s purview for corporate registration and compliance with company law. This includes virtual asset exchanges, custodians, wallet providers, and other service providers that choose to establish a formal corporate presence within the country.

The SECP’s jurisdiction extends to any legal entity registered under the Companies Act. This means that if a virtual asset business, regardless of its specific service offering, establishes itself as a private limited company, a public limited company, or any other corporate form in Pakistan, it automatically becomes subject to SECP regulations. This includes:

• Virtual Asset Exchanges: Platforms facilitating the trading of virtual assets.
• Custodial Wallet Providers: Entities that hold virtual assets on behalf of clients.
• Non-Custodial Wallet Providers: While not holding assets directly, if they offer services as a company, they are covered.
• Issuers of Virtual Assets: Companies that issue their own virtual tokens or cryptocurrencies.
• Other Virtual Asset Service Providers (VASPs): Any other entity providing services related to virtual assets that chooses to incorporate.

It is important for operators to understand who needs a VASP licence in Pakistan and how this interacts with the fundamental requirement of corporate registration with the SECP.

What are the corporate governance requirements for VASPs?

Corporate governance requirements for VASPs, as overseen by the SECP, mandate a robust framework for oversight, accountability, and transparency. This includes establishing a competent board of directors, implementing effective internal controls, managing risks appropriately, and ensuring ethical conduct to protect stakeholders and maintain market integrity.

The SECP places significant emphasis on sound corporate governance for all registered entities, including virtual asset firms. Key aspects include:

• Board of Directors: A well-structured board with a mix of executive and non-executive directors, possessing relevant expertise. The SECP also requires fit and proper tests for directors and key management personnel, ensuring their integrity and competence.
• Internal Controls: Implementation of strong internal control systems to safeguard assets, prevent fraud, and ensure operational efficiency.
• Risk Management Framework: Developing and maintaining a comprehensive framework to identify, assess, monitor, and mitigate risks, including those unique to virtual assets like cybersecurity risks and market volatility.
• Audit Committee: Establishment of an independent audit committee to oversee financial reporting and internal audit functions.
• Compliance Officer: Appointing a dedicated compliance officer to ensure adherence to all applicable laws and regulations, including those related to anti-money laundering and combating the financing of terrorism (AML/CFT).
• Ethical Conduct: Adherence to a code of conduct that promotes ethical behaviour and transparency across all levels of the organisation.

These requirements are designed to build trust and stability in the nascent virtual asset sector.

How do capital requirements affect virtual asset companies?

Capital requirements affect virtual asset companies by ensuring they possess sufficient financial resources to cover operational costs, absorb potential losses, and protect client assets. These requirements, which are currently under consultation by PVARA, are crucial for maintaining solvency, fostering market stability, and demonstrating a firm’s financial resilience to regulators and clients.

While specific capital requirements for VASPs are being developed by PVARA, the SECP’s general corporate regulations already imply a need for adequate capitalisation. The proposed framework for virtual assets is expected to introduce explicit capital thresholds, similar to those seen in traditional financial sectors. These requirements aim to:

• Ensure Solvency: Guarantee that VASPs have enough capital to meet their financial obligations, even during periods of market volatility.
• Protect Client Funds: Provide a buffer against operational failures or unforeseen events that could impact client assets. For instance, rules around virtual asset custody and segregating client crypto are closely linked to a firm’s financial stability.
• Foster Market Confidence: Signal to investors and users that the VASP is financially sound and capable of sustaining its operations.

Operators should closely monitor updates regarding VASP capital requirements in Pakistan as they will be a critical factor for obtaining and maintaining a licence.

What are the ongoing compliance obligations for SECP-registered VASPs?

SECP-registered VASPs have ongoing compliance obligations including filing annual returns, audited financial statements, and adhering to corporate governance standards. They must also disclose significant changes to their corporate structure or operations and comply with any specific reporting requirements introduced by PVARA, ensuring transparency and accountability to regulators.

Beyond initial registration, virtual asset companies must continuously meet their obligations under the Companies Act and any future PVARA regulations. These include:

1. Annual Filings: Submitting annual returns and audited financial statements to the SECP within prescribed deadlines. These financial statements must adhere to international accounting standards adopted in Pakistan.
2. Statutory Registers: Maintaining accurate and up-to-date statutory registers, such as registers of members, directors, and charges.
3. Disclosure Requirements: Promptly disclosing any material changes to the company’s structure, management, or ownership to the SECP.
4. Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Compliance: While PVARA will lead on VASP-specific AML/CFT, the SECP coordinates with other agencies to ensure corporate compliance. This includes customer due diligence for crypto exchanges and understanding suspicious transaction reports.
5. Adherence to Corporate Governance: Continuously upholding the standards of corporate governance, including regular board meetings and independent oversight.

These obligations ensure that VASPs operate transparently and responsibly, contributing to the overall integrity of Pakistan’s financial system.

How does the SECP contribute to combating financial crime in the virtual asset sector?

The SECP contributes to combating financial crime in the virtual asset sector by ensuring corporate entities adhere to robust governance, transparency, and reporting standards. It works in coordination with other agencies like the Financial Monitoring Unit (FMU) and PVARA to enforce anti-money laundering (AML) and combating the financing of terrorism (CFT) measures, aligning with international standards like those from the Financial Action Task Force (FATF).

While PVARA is expected to be the frontline regulator for AML/CFT in the virtual asset space, the SECP’s role is crucial in establishing the corporate framework that supports these efforts. By requiring companies to maintain transparent ownership structures, proper record-keeping, and robust internal controls, the SECP helps to prevent the misuse of corporate vehicles for illicit activities. Furthermore, the SECP ensures that companies comply with general financial crime laws and cooperates with other regulatory bodies. Pakistan’s commitment to implementing FATF Recommendation 15, which specifically addresses virtual assets, involves a coordinated effort across multiple government agencies, including the SECP. This collaborative approach is vital for creating a secure and compliant virtual asset ecosystem.

What are the implications for foreign virtual asset firms operating in Pakistan?

Foreign virtual asset firms operating in Pakistan face implications that require them to consider establishing a local corporate presence and complying with SECP registration requirements, alongside future PVARA licensing. This ensures they operate legally within Pakistan’s jurisdiction, adhere to local company law, and contribute to the regulated virtual asset ecosystem.

Foreign virtual asset firms wishing to serve Pakistani users, or establish operations within the country, must carefully consider their legal structure. While the question of whether a foreign exchange can legally serve Pakistani users is complex, establishing a local corporate entity is generally seen as the path to full regulatory compliance. This would involve:

• SECP Registration: Incorporating a subsidiary or registering a branch office with the SECP, subjecting them to Pakistan’s company law.
• Local Management: Appointing local directors or representatives who can ensure compliance with domestic regulations.
• Tax Obligations: Adhering to the tax laws enforced by the Federal Board of Revenue (FBR), including how the FBR treats crypto gains.
• PVARA Licensing: Obtaining the necessary virtual asset service provider licence from PVARA once the framework is fully implemented.

This approach ensures that foreign firms contribute to the local economy and operate under the same regulatory scrutiny as domestic entities, promoting a level playing field and enhancing consumer protection. You can find more regulatory updates on our blog.

About this analysis

This analysis by Sarzif Policy, an independent research desk, explores the Securities and Exchange Commission of Pakistan’s (SECP) role in regulating virtual asset businesses, focusing on the intersection of company law and crypto. The information presented is based on our understanding of the current regulatory landscape as of 12 August 2026, drawing from publicly available information from SECP, PVARA, the State Bank of Pakistan, the FBR, and FATF guidance. It is important to note that Pakistan’s virtual asset regulatory framework is still at a consultation stage, and specific rules are subject to change. Operators are strongly advised to verify all specific requirements and figures directly with PVARA or other relevant authorities before making business decisions. This article provides general information and does not constitute legal advice. For specific guidance, please consult with a qualified legal professional. For more information about our work, please visit https://pvara.org.