Is Virtual Asset Mining Regulated in Pakistan?

Mining sits in an unusual position under the Virtual Assets Act, 2026: it is defined, discussed, and given its own dedicated section, yet the Act goes out of its way to say that most mining does not need a licence at all. This article sets out exactly what section 37 and the Act’s definition of mining say, where the exemption ends, and what a registration framework for larger operators is expected to look like.

What does the Virtual Assets Act define as “Virtual Asset Mining”?

Section 3(1)(xix) of the Act defines Virtual Asset Mining as the process of validating or verifying transactions and recording them on a distributed ledger or blockchain network, using computational or other consensus mechanisms, and, in return, earning virtual assets, transaction fees, or other rewards. This definition covers the core technical activity of mining — contributing computational or consensus work to a network in exchange for a reward — without reference to scale, purpose, or who the miner serves.

Section 3(1)(xix) states:

“Virtual Asset Mining” means the process of validating or verifying transactions and recording them on a distributed ledger or blockchain network, using computational or other consensus mechanisms, and, in return, earning virtual assets, transaction fees, or other rewards.

Notably, this definition is not limited to proof-of-work mining. “Computational or other consensus mechanisms” is broad enough to also cover validator activity on proof-of-stake networks, though the Act’s separate staking provisions under Schedule I address staking performed on behalf of customers as a distinct, licensable service.

Does pure mining require a PVARA licence?

No. Section 37(2) states expressly that pure mining, by itself, does not constitute a Virtual Asset Service requiring a licence under section 18 and Schedule I of the Act. A person or business mining for its own account — running mining hardware, validating transactions, and keeping the resulting rewards — sits outside the Act’s licensing regime entirely, regardless of how much hardware or hash rate it operates.

Section 37(2) states:

Pure mining, by itself, does not constitute a Virtual Asset Service requiring license under section 18 and Schedule I. Mining operations involving customer assets or funds, however, shall be treated as Virtual Asset Services and require licensing.

The second sentence of section 37(2) is the exemption’s limit, not an extension of it: the moment a mining operation involves customer assets or funds — for example, hosting mining capacity on behalf of paying clients rather than mining solely for itself — the activity converts into a Virtual Asset Service and requires licensing. Schedule I names this specific category as “Mining-related Virtual Asset Services.”

What is the difference between “pure mining” and a licensable mining service?

The test the Act draws is not about scale, technology, or profitability — it is about whether customer assets or funds are involved.

• a company that buys mining rigs, runs them on its own account, and keeps 100% of the rewards for itself is engaged in pure mining under section 37(2), unlicensed regardless of how large the operation is
• a company that sells mining capacity to third-party customers, or that holds and manages customer funds or virtual assets in connection with mining activity, has crossed into a Virtual Asset Service and needs a licence
• the distinguishing question is always: does a customer’s asset or fund sit inside this operation’s custody or control at any point, in connection with the mining activity

This distinction is developed further under Schedule I item 10, which defines the licensable mining-related service category in more detail.

Can PVARA still regulate mining that does not require a licence?

Yes, in two ways, and neither depends on the licensing exemption. Section 37(1) gives the Authority power to issue Regulations, standards, and guidelines for mining activities generally, in consultation with relevant government entities — this power is not limited to licensed mining-related services and can, in principle, extend to unlicensed pure mining as well.

Separately, section 37(3) allows PVARA to establish a registration or declaration framework for mining operators that exceed thresholds of scale, energy use, or hash rate, as set by future Regulations.

Section 37(3) states:

The Authority may establish a registration or declaration framework for mining operators exceeding thresholds of scale, energy use, or hash rate, as set by Regulations.

This is the mechanism that closes the gap between “no licence needed” and “no oversight at all.” A large pure-mining operation may never need a Virtual Asset Service licence, yet could still fall within a future registration or declaration requirement once PVARA sets the scale, energy-use or hash-rate thresholds that trigger it.

Mining scenario	Licence required?	Other oversight
Small-scale mining for own account	No	Potentially subject to general section 37(1) Regulations
Large-scale mining for own account, above future thresholds	No	Subject to section 37(3) registration/declaration framework once thresholds are set
Mining service involving customer assets or funds	Yes — as a Virtual Asset Service	Full licensing regime under sections 18–23

What thresholds trigger the mining registration framework?

The Act does not state them. Section 37(3) leaves scale, energy use, and hash rate thresholds entirely to future Regulations, and none of the source documents reviewed for this article contain a published threshold. This means that, at the time of writing, no mining operator — however large — is presently caught by a registration or declaration duty under section 37(3), because the trigger itself has not yet been defined.

Our reading is that these thresholds, once published, are likely to track policy concerns visible elsewhere in the Act’s objects — investor protection, market integrity, and Pakistan’s broader energy and grid-stability considerations — but this is inference, not a stated position, and an operator should not assume a particular numeric threshold in advance of PVARA’s Regulations.

What should a mining operator in Pakistan do now?

• confirm whether the operation is genuinely “pure” mining for own account, or whether it involves any element of holding or managing customer assets or funds, since that single distinction decides whether licensing applies at all
• if customer assets or funds are involved at any point, treat the activity as a Virtual Asset Service requiring a full licence application, not as an unlicensed activity that happens to touch mining
• monitor PVARA’s publication of section 37 Regulations closely, since general mining standards, and the scale/energy/hash-rate thresholds for the section 37(3) registration framework, may apply even to operations that never need a service licence
• keep records of scale, energy consumption, and hash rate now, so the business can assess its position quickly once thresholds are published, rather than discovering retroactively that a registration duty already applied
• do not assume the absence of a licensing requirement means the absence of all regulatory interest — section 37(1) gives PVARA a general power to issue standards and guidelines for mining that is broader than the licensing exemption itself

Pure mining in Pakistan is, today, genuinely unlicensed — but “unlicensed” is not the same as “unregulated.” A miner planning market entry or scale-up in Pakistan should treat section 37 as a two-track provision: a firm licensing exemption for now, sitting alongside a registration framework and general rulemaking power that PVARA has not yet activated but clearly intends to.

About this analysis

This analysis was prepared by the CoinConnect research desk from the Virtual Assets Act, 2026, read as published. Where practice is not yet settled or guidance has not 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.