Stablecoin issuer / redeemer in Pakistan
Issues a fiat-pegged stablecoin to the public, operates redemption, and holds reserves backing the float.
Stablecoin issuer is not permitted in Pakistan.
Verdict Details
- Permitted
- no
- Local entity required
- Yes
- Licensing burden
- High
- Last updated
- 2026-07-13
AML Obligations
- SBP BPRD Circular No. 04 of 2022 (CDD/KYC Regulations, 2022) mandates VASPs to implement full CDD including identity verification for individuals (CNIC/passport, address, occupation) and legal persons (registration docs, beneficial ownership).
- Risk-based approach required — enhanced due diligence for higher-risk customers, PEPs, and transactions; simplified CDD permitted for lower-risk scenarios but never full exemption.
- Suspicious Transaction Reporting (STR) to the Financial Monitoring Unit (FMU) — any unusual or suspicious transaction must be reported electronically with no tipping-off.
- Sanctions screening against UN/national sanctions lists is required.
- Travel Rule (FATF Recommendation 16) obligations implicitly apply to VASPs under the CDD/KYC regulations, requiring originator/beneficiary information for crypto transfers.
- Record-keeping: customer identification data and transaction records must be maintained for required periods under AMLA 2010 and SBP AML Regulations 2015.
Key Restrictions
- SBP Circular No. 03 of 2018 prohibits all banks, MFBs, PSOs/PSPs from dealing in, facilitating, or maintaining accounts related to virtual currencies — stablecoin issuers cannot access the formal banking system.
- Stablecoins are not recognized as legal tender; the SBP has explicitly stated that virtual currencies/tokens are not legal tender.
- No licensing framework exists for stablecoin issuance — the activity is not a recognized or licensed activity under current Pakistani law.
- Any entity engaged in stablecoin issuance would be operating outside the regulated financial system and cannot lawfully connect to bank accounts or payment infrastructure.
- The SBP is exploring a CBDC which could preempt or restrict private stablecoin issuance.
Key Risks
- De facto banking exclusion — inability to open/maintain bank accounts or integrate with payment systems because regulated financial institutions are prohibited from dealing with virtual asset entities.
- Regulatory ambiguity — stablecoins have no explicit legal classification; they could potentially be treated as e-money, securities, or remain unregulated, creating legal uncertainty for issuers.
- Enforcement risk — SBP and FIA could take action under AMLA 2010 or the SBP circular against unlicensed financial activities.
- FATF-driven regulatory change risk — Pakistan is under pressure to regulate VASPs, and any future framework could impose retroactive compliance burdens or penalties.
- Tax uncertainty — gains/losses from stablecoin activities may be classified as capital gains, business income, or other sources with varying tax treatments, creating filing complexity.
- Reputational risk from operating in an environment where the central bank has publicly warned against and prohibited virtual currency dealings.
Evidence
This verdict synthesizes the following facts. Each fact links to its primary source(s).
No Explicit Classification: Pakistani law does not explicitly classify stablecoins as e-money, payment tokens, or securities.
Not Legal Tender: The State Bank of Pakistan has explicitly stated that virtual currencies/coins/tokens are not legal tender.
Current Reality: Stablecoins, like other cryptocurrencies, are simply considered "virtual assets" which are not recognized or regulated.
None: As there is no specific regulatory framework for stablecoins, there are no established reserve requirements outlined in Pakistani law for stablecoin issuers.
None: Similarly, there are no specific licensing requirements for stablecoin issuers in Pakistan. Issuing stablecoins is not a recognized or licensed activity.
None: There are no legally enforceable redemption rights for stablecoin holders under Pakistani law. The ability to redeem stablecoins for the underlying pegged asset depends entirely on the issuer's terms of service and trustworthiness, as there is no regulatory oversight.
State Bank of Pakistan (SBP) Circular No. 03 of 2018:
A standing prohibition by the State Bank of Pakistan (SBP) for regulated financial institutions to deal in or facilitate virtual assets.
SBP BPRD Circular No. 03 of 2018: Issued on April 06, 2018, this circular explicitly prohibits all banks, Microfinance Banks (MFBs), and Payment System Operators (PSOs)/Payment Service Providers (PSPs) from:
Dealing in Virtual Currencies/Coins/Tokens (VCs/VCOs/VCTs).
Facilitating any transaction involving VCs/VCOs/VCTs.
Maintaining accounts of individuals/entities involved in VCs/VCOs/VCTs.
Implication: This circular effectively creates a de facto ban on any regulated financial institution in Pakistan from engaging with or facilitating cryptocurrency activities. This means that:
Cryptocurrency exchanges, custody providers, and payment processors cannot legally operate with bank accounts in Pakistan or integrate with the traditional financial system.
Any individual or entity involved in crypto transactions faces significant challenges in dealing with their funds through regulated financial channels.
Exchanges: No license. Cannot lawfully connect to the banking system.
SBP Circular (January 2018): The State Bank of Pakistan issued Circular No. 03 of 2018, titled "Prohibition of Dealing in Virtual Currencies/Tokens (VCs/ICTs)." This circular explicitly stated that VCs/ICTs are not legal tender in Pakistan and prohibited all banks, financial institutions, and payment system providers from dealing in, processing, or facilitating transactions involving VCs/ICTs.
SBP BPRD Circular No. 04 of 2022 (CDD/KYC Regulations, 2022) (PDF link to SBP website)
Identification and Verification of Customer Identity:
Beneficial Ownership: Identify and take reasonable measures to verify the identity of the beneficial owner(s) of the customer, including for legal persons, trusts, and other legal arrangements.
VASPs must adopt a risk-based approach to CDD. This means applying enhanced CDD measures for higher-risk customers, products, services, transactions, or geographic areas.
Trigger: Any transaction (attempted or completed) that appears unusual, lacks a clear economic or lawful purpose, is inconsistent with the customer's known profile, or raises suspicion of money laundering or terrorist financing.
Reporting Mechanism: Reports are filed electronically through the FMU's secure reporting portal.
"No Tipping Off": VASPs and their employees are prohibited from disclosing to the customer or any third party that a STR has been or will be filed.
"Travel Rule" (FATF Recommendation 16): While the SBP CDD/KYC Regulations 2022 implicitly align with FATF standards, explicit guidance on the "Travel Rule" for VASPs (requiring the collection and transmission of originator and beneficiary information for crypto transfers above a certain threshold) may still be developing or need further specific directives. However, as Pakistan adheres to FATF standards, VASPs should anticipate and prepare for full implementation of this rule.
State Bank of Pakistan (SBP): Has repeatedly issued warnings against dealing in cryptocurrencies, considering them illegal tender and a risk to financial stability. SBP has also restricted banks and financial institutions from processing transactions related to virtual currencies.
Verdict Attribution
- Source:
- AI-Generated · Unreviewed
- AI synthesized:
- 2026-07-13 (deepseek-chat)
- Last updated:
- 2026-07-13
- Confidence:
- high
This verdict was produced by an AI model from the underlying facts. Confirm with counsel before relying on it for material decisions.
No — issuing a fiat-pegged stablecoin to the public in Pakistan is not currently permitted; there is no licensing framework, the SBP has prohibited regulated financial institutions from facilitating virtual asset activity, and stablecoin issuers cannot access the banking system, making lawful operation infeasible under current law.
Questions this verdict aims to answer
- What e-money or banking license is required to issue?
- What reserve composition, segregation, and audit rules apply?
- What redemption rights must be granted to holders?
- Are foreign-issued stablecoins permitted for use locally?