Insider trading is not a vague concept borrowed from securities law and pasted into crypto regulation. The Virtual Assets Act 2026 defines it with specific terms — “Inside Information” and “Insiders” — and then prohibits three distinct behaviours built on those terms. Anyone with access to non-public information about a virtual asset business needs to know exactly where the line sits.
This matters more in virtual asset markets than in traditional ones. A licensed exchange operator, a token issuer’s employee, and a service provider’s family member can all sit close enough to order flow or issuance decisions to become an insider without ever intending to. The Act’s definitions are broad enough to catch that.
What is “Inside Information” under the Act?
Inside Information is non-public information likely to affect virtual asset prices if disclosed, including client orders, trading intentions, or decisions related to issuance or facilitation. This comes directly from section 3(1)(xi) of the Act, which defines the term “as may be further defined by regulations” — meaning the Authority can narrow or extend the definition later.
“‘Inside Information’ means non-public information likely to affect virtual asset prices if disclosed, including client orders, trading intentions, or decisions related to issuance or facilitation, as may be further defined by regulations.”
Three things stand out in this definition. First, the test is effect on price, not the source of the information — it does not matter whether the information came from inside a company or was overheard at a conference, if it is non-public and price-affecting, it qualifies. Second, the list of examples — client orders, trading intentions, issuance or facilitation decisions — is illustrative, not exhaustive, because the clause says “including”, not “meaning only”. Third, the Authority retains a standing power under Regulations to expand this definition, so the boundary is not fixed by the Act alone.
In practice, this covers a wide range of internal knowledge at a virtual asset service provider: a large pending client order not yet executed, a decision to list or delist an asset, a forthcoming stablecoin redemption suspension, or an unannounced token issuance. Our reading is that any information an operator would not want a competitor or customer to have before a trade is a reasonable starting proxy for “inside information” under this section, pending the Regulations the Act promises.
Who counts as an “Insider”?
Section 3(1)(xii) defines Insiders broadly, covering both people with a formal role at the business and people who obtain the information through improper means. It reads:
“‘Insiders’ include Controller, officers, directors, employees, or affiliates of issuers or Virtual Asset Service Providers with access to Inside Information; family members; or other persons obtaining such information unlawfully or through employment, and as may be further prescribed by Regulations.”
Breaking that down, the Act names five categories of insider:
- a Controller — under section 3(1)(v), a person holding or entitled to exercise 20% or more of the voting power, ownership interest, or share capital of a licensee, or who otherwise exercises significant influence over its management;
- officers, directors, or employees of an issuer or virtual asset service provider who have access to inside information;
- affiliates of an issuer or service provider with the same access;
- family members of any of the above — the Act does not itself define the degree of relationship that qualifies; and
- any other person who obtains inside information unlawfully or through employment, even outside the categories above.
That final category is the widest. It is not limited to people who work at a licensed entity — it catches anyone who obtains inside information “unlawfully or through employment”, which could include a contractor, an outsourced service provider’s staff, or a person who receives a tip. The Authority may also prescribe further categories of insider by Regulations, so this list is a floor, not a ceiling.
What are the three prohibited acts?
Section 52(2) of the Act sets out exactly three things an insider — or anyone using inside information — may not do:
“(a) use inside information to trade virtual assets for themselves or others; (b) recommend or induce trading based on inside information; or (c) unlawfully disclose inside information.”
Read together, these three limbs cover trading on the information yourself, causing someone else to trade on it, and simply passing it on. You do not need to profit personally to breach the section — recommending a trade to a friend based on a pending issuance decision satisfies limb (b) even if you never place an order yourself, and telling a colleague about an unannounced listing satisfies limb (c) even if nobody trades on it at all.
| Prohibited act | Section | What it covers |
|---|---|---|
| Trading on inside information | 52(2)(a) | Using it to trade for yourself or on behalf of others |
| Recommending or inducing trades | 52(2)(b) | Advising or encouraging someone else to trade based on it |
| Unlawful disclosure | 52(2)(c) | Passing the information on, without a lawful basis to do so |
Section 52(1) sits alongside this and prohibits a separate, wider category: market manipulation or market abuse in relation to virtual assets generally. Section 3(1)(xvii) defines Market Manipulation or Market Abuse as any act giving false or misleading signals as to supply, demand or price, securing price at an abnormal or artificial level, or employing any device or deception to interfere with normal supply and demand. Insider trading under section 52(2) and market manipulation under section 52(1) are two separate prohibitions in the same section — a person can breach one without breaching the other.
Has PVARA issued guidance on what counts as manipulative behaviour?
Not yet, as far as the published Act discloses. Section 52(3) states that the Pakistan Virtual Asset Regulatory Authority (“PVARA” or “the Authority”) shall issue guidelines and regulations specifying the type of manipulative behaviour covered by the section.
“The Authority shall issue guidelines and regulations specifying the type of manipulative behaviour.”
Until those guidelines are published, the operative text is the statutory definition itself — non-public, price-affecting information, used, recommended on, or disclosed by an insider as broadly defined in section 3(1)(xii). This is a case where an ambiguous edge — for example, whether a customer’s own trading intention passed to a broker counts as inside information about that customer, or whether general market commentary crosses into “recommending” a trade — has not yet been resolved by published guidance. Verify the current position with PVARA before treating any borderline scenario as safe.
What happens if section 52 is breached?
Section 54(3) of the Act sets criminal penalties for wilful contravention of section 52, with different treatment for natural and legal persons. A natural person faces imprisonment up to three years, a fine up to twenty-five million Rupees, or both. A legal person faces a fine of three times the profit gained or loss avoided, or — where that figure cannot be determined — a fine of up to 15% of the body corporate’s total annual turnover in the preceding financial year. That corporate fine formula has no fixed ceiling in Rupee terms and is one of the more severe financial exposures anywhere in the Act.
Beyond the criminal track, a breach of section 52 also touches fit and proper status. Under section 20(4), fit-and-proper criteria are continuing in nature, and a Controller, Sponsor, Chief Executive Officer, Director or other Key Individual must notify the Authority of any matter that may affect their fitness and propriety — an insider trading investigation would reasonably fall within that duty even before any conviction.
What should a virtual asset business do about this?
The practical exposure sits less with deliberate manipulation and more with routine information handling. Anyone running a broker-dealer or exchange licence operation handles client order flow constantly — the definition of inside information names “client orders” explicitly as an example. Building information barriers between trading desks and anyone with issuance or listing knowledge, restricting personal trading by staff and their family members, and documenting who has access to pending decisions are the practical controls that map directly onto section 52(2)’s three prohibited acts.
This also belongs in the conflict-of-interest management obligations under section 44 of the Act, which requires licensees to identify, manage and disclose conflicts and not place their own interests above customers’. An insider trading control framework and a conflicts-of-interest framework are, in most operators, the same document wearing two names — and both sit upstream of the market entry planning that should happen before a licence is granted, not after.
About this analysis
This analysis was prepared by the CoinConnect research desk from the Virtual Assets Act 2026 as passed by the National Assembly — principally sections 3(1)(v), 3(1)(xi), 3(1)(xii), 3(1)(xvii), 20(4), 44, 52 and 54(3) — read as published. Where guidance has not yet been issued, that is stated in the text above.
Regulatory positions change and specific requirements should be verified against the current position published by the relevant authority before you act on them. This is information and analysis, not legal advice, and it does not create an advisory relationship. Take professional advice on your own circumstances.
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