Pakistan’s new virtual-asset regime faced a different kind of scrutiny in the Senate on Monday: not whether cryptocurrency should be regulated, but how investors will be protected and how activity in the sector will eventually be taxed.
The questions came during an August 31 meeting of the Senate Standing Committee on Cabinet Secretariat, chaired by Senator Rana Mahmood Ul Hassan. The Senate’s official committee record confirms that the meeting took place in Islamabad and that the committee continues to oversee matters connected with the Cabinet Secretariat, under which PVARA falls.
During the briefing, PVARA Chairman Bilal Bin Saqib was also reported to have cited an estimate of around 40 million crypto accounts in Pakistan. Similar figures have circulated previously, and Chain Pakistan has not found an official methodology showing how that estimate was calculated. The more immediate policy questions raised by the discussion concern taxation and investor protection.
Pakistan has already created a formal regulatory structure for virtual-asset businesses, but the tax treatment of crypto activity remains considerably less defined.
A Chain Pakistan review of current federal tax material and PVARA’s regulatory framework found detailed rules for licensing, compliance and customer protection, but no comparable crypto-specific tax regime establishing dedicated rates or a complete mechanism for taxing virtual-asset gains.
That distinction matters. Regulation and taxation are developing on separate tracks.
Crypto regulation has moved faster than crypto taxation
Pakistan’s Virtual Assets Act, 2026 established the Pakistan Virtual Assets Regulatory Authority as the federal regulator for virtual assets and Virtual Asset Service Providers.
The framework gives PVARA responsibility for supervision, market integrity, compliance and consumer protection. The government has also continued to present virtual assets as part of a broader policy agenda covering digital finance, blockchain infrastructure and regulated financial innovation.
Tax policy is less settled.
Pakistan’s 2026 federal tax framework contains extensive rules covering income, withholding and other forms of economic activity, but there is no equivalent standalone crypto tax regime setting out a dedicated tax rate or a complete treatment for virtual-asset transactions.
That does not mean income or gains connected with virtual assets automatically fall outside Pakistan’s existing tax laws. Existing provisions may still apply depending on the nature of the transaction, the income and the taxpayer.
What remains unclear is how a dedicated framework would deal with issues such as the classification of gains, the point at which a taxable event occurs, how acquisition cost should be calculated, and whether regulated exchanges or other service providers would eventually have reporting or withholding responsibilities.
Those are separate questions from whether a crypto business is legally permitted to operate.
Tax policy remains unfinished
The difficult part of building a crypto tax regime is not simply choosing a percentage.
Authorities would first have to decide how different forms of virtual-asset activity should be treated.
A sale of Bitcoin for rupees is one example. Crypto markets also involve exchanges between one token and another, staking rewards, token distributions, stablecoins, mining income, lending, derivatives and assets held on foreign platforms or in self-custodied wallets.
Each creates different questions around valuation, record keeping and when income or a gain should be recognised.
The role of regulated platforms would also matter.
Reporting requirements imposed on exchanges could give tax authorities greater visibility over activity taking place through regulated providers. Transactions conducted through overseas platforms, peer-to-peer markets or self-custodied wallets would be more difficult to capture through the same mechanism.
No complete crypto-specific structure addressing those issues appears in the current federal tax framework reviewed by Chain Pakistan.
Investor protection is further developed on paper
Investor protection is more clearly addressed in Pakistan’s virtual-asset regulatory framework.
PVARA’s regulatory model covers areas including market conduct, customer protection, governance, compliance and the safeguarding of assets handled by regulated service providers.
These protections are intended to deal with the conduct of businesses that hold customer assets or provide regulated virtual-asset services.
They do not protect an investor from the price of Bitcoin, Ether or another virtual asset falling.
That distinction is important.
A regulator can require an exchange or custodian to maintain proper systems, safeguard customer assets, follow disclosure requirements and comply with market-conduct rules.
It cannot guarantee the performance of the asset being traded.
A transaction can therefore take place through a regulated business and still result in an investment loss.
Regulation cannot eliminate market risk
The Senate discussion brings two different forms of protection into the same debate.
The first concerns misconduct, custody failures, inadequate controls or other failures by a service provider.
Those risks can be addressed through regulation, supervision and enforcement.
The second is market risk: the possibility that an asset simply loses value.
That risk remains with the investor.
The distinction also exists in conventional financial markets. Regulation can improve market integrity and reduce certain operational or conduct risks, but it cannot prevent the value of an investment from declining.
For Pakistan, communicating that distinction will become increasingly important as virtual-asset regulation becomes more visible to the public.
Several tax questions still need answers
If Pakistan eventually introduces a dedicated crypto tax framework, several basic issues will have to be resolved.
Authorities would need to determine how different types of virtual-asset gains are treated under the tax system and whether the classification changes depending on the activity involved.
They would also need rules for valuation, cost basis and reporting.
Staking and mining create different tax questions from simply buying and selling an asset. Token-to-token transactions raise another issue: whether exchanging one virtual asset for another creates a taxable event even when no rupees are received.
Stablecoins, derivatives and lending products add further complexity.
A workable framework would also have to address the practical limits of enforcement in a market where users can move assets between regulated platforms, offshore exchanges and self-custodied wallets.
Those questions are more fundamental than simply attaching a tax rate to crypto.
Parliament’s questions are changing with the market
Pakistan’s earlier policy debate focused heavily on whether virtual assets should be allowed and regulated.
That institutional question has moved considerably further through the creation of PVARA and the establishment of a dedicated regulatory framework.
The questions now reaching Parliament are increasingly practical: how economic activity involving virtual assets should enter the tax system, how customers should be protected when regulated businesses fail or misbehave, and where responsibility for ordinary investment losses should remain with the investor.
The widely cited estimate of around 40 million crypto accounts illustrates the scale being discussed by policymakers, but the methodology behind that figure remains unclear.
The more important issue is whether Pakistan’s tax and consumer-protection systems can keep pace with the market the government is now attempting to regulate.
Primary Sources
- Senate of Pakistan — Standing Committee on Cabinet Secretariat meeting record, August 31, 2026
- Senate of Pakistan — Cabinet Secretariat Committee records
- Pakistan Virtual Assets Regulatory Authority — Virtual Assets regulatory framework
- Federal Board of Revenue — Federal tax and Finance Act 2026 materials
- Government of Pakistan / Press Information Department — official virtual-asset policy statements and PVARA briefings
