PVARA's Statutory Objectives and Functions, Explained

Regulators are usually understood through what they license and what they punish. Section 9 of Pakistan’s Virtual Assets Act, 2026 asks a broader question first: what is this Authority actually for? Before the Act sets out licensing chapters, prudential rules or enforcement powers, section 9(1) lists nine functions PVARA must perform, in the Authority’s own defined terms rather than as a general policy statement.

Reading these nine functions together matters for anyone dealing with PVARA, because they shape how the Authority is likely to exercise the discretion the rest of the Act gives it. A regulator whose statutory function includes attracting investment reads differently to applicants than one whose mandate is purely restrictive.

What are PVARA’s nine statutory functions?

Section 9(1) states that “the Authority shall” perform each of the following, quoted directly from the text:

1. Licensing, regulation and supervision — “license, regulate and supervise Virtual Asset Service Providers and issuers in accordance with the provisions of this Act and any Rules or Regulations made thereunder.”
2. Customer and market protection — “protect customers and investors and the integrity of Pakistan’s Virtual Asset markets by establishing and enforcing appropriate safeguards and conduct of business requirements, prudential, operational-resilience, risk-management standards, and measures to prevent money laundering, terrorist financing and other illicit use of Virtual Assets.”
3. Investment attraction — “attract investment and encourage companies operating in the fields of Virtual Assets to base their business in Pakistan.”
4. Responsible innovation and inclusion — “promote responsible innovation, digital financial inclusion and the development of compliant Virtual Asset markets within a framework that manages risks and supports financial stability and market integrity.”
5. Blockchain and DLT development — “promote, develop, govern, and regulate the adoption, deployment, and scalable use of blockchain technology and distributed ledger technology across Pakistan.”
6. Substance-based classification — assess, determine and classify any virtual asset, service, activity, offering, issuer or service provider based on its substantive features rather than its name or structure, “subject to consultation with the State Bank of Pakistan or the Securities and Exchange Commission of Pakistan where the asset exhibits characteristics falling within their respective mandates.”
7. AML/CFT coordination — “coordinate with the Financial Monitoring Unit, National AML and CFT Authority, other relevant authorities and law enforcement agencies to combat money laundering, terrorist financing, and other illicit activities associated with Virtual Assets, in accordance with the Anti-Money Laundering Act, 2010 (VII of 2010), other applicable laws, and international standards.”
8. Government advisory role — “advise the Federal Government, on its own motion or upon request, on regulatory, supervisory, technical or emerging-risk matters relating to Virtual Assets, digital-asset markets, tokenization, stablecoin structures, blockchain, DLT, cyber-risks or any matter connected with its mandate under this Act.”
9. Residual, incidental powers — “do all such acts as may be necessary or incidental to the discharge of its functions and to achieve its objectives under this Act and other applicable laws.”

Why does “attract investment” sit alongside enforcement duties?

Because the Act does not treat PVARA as a purely restrictive body. Function three — attracting investment and encouraging virtual-asset businesses to base themselves in Pakistan — sits in the same subsection as customer protection and AML/CFT enforcement, without one being subordinated to the other in the statutory text. Read alongside function four, which commits the Authority to “promote responsible innovation, digital financial inclusion and the development of compliant Virtual Asset markets,” the Act frames PVARA’s mandate as balancing market growth with market integrity, rather than treating growth as an afterthought to supervision.

This has a direct, practical reading for an applicant: the licensing framework an applicant navigates is not solely defensive. Investment attraction is a named statutory function, not marketing language — it is one of the nine things the Act legally requires the Authority to do.

What does the substance-over-form classification function actually cover?

Function six gives PVARA the power to look past labels. The Act’s own wording is broad: the Authority may “assess, determine, and classify any Virtual Asset, service, activity, offering, issuer, or service provider based on its substantive features, underlying function, method of use, or economic effect, irrespective of the nomenclature, structure, or designation assigned to it.” This lets PVARA determine, for example, whether a token marketed under a novel name is in substance an asset-referenced token, whether a platform calling itself something else is in substance a virtual asset service provider, or whether an offering constitutes a financial activity within the Act’s scope.

Two boundaries apply to this power directly from the text. First, where an asset “exhibits characteristics falling within their respective mandates,” PVARA must consult the State Bank of Pakistan or the Securities and Exchange Commission of Pakistan before classifying it — the power is not exercised in isolation where another regulator’s jurisdiction is genuinely engaged. Second, the classification function in section 9(1) is a general statement of the power; how the Authority actually exercises it in a contested case is not spelled out further in the source documents reviewed.

What does the AML/CFT coordination function require in practice?

Function seven ties PVARA’s own coordination duty directly to the Anti-Money Laundering Act, 2010 and to named bodies — the Financial Monitoring Unit (FMU) and the National AML-CFT Authority. This is a coordination duty on the Authority itself, distinct from the obligations the Act separately places on licensees. Elsewhere in the Act, licensed virtual asset service providers are deemed financial institutions for AML purposes and must report suspicious transactions to the FMU through goAML registration. Function seven confirms PVARA itself must coordinate its supervisory framework with those same bodies, “in accordance with… international standards” — a link to the same Financial Action Task Force (FATF) alignment duty that appears in the Act’s extraterritorial-application provisions.

Does the advisory function give PVARA influence beyond its own licensees?

Yes, on its own terms. Function eight lets PVARA advise the Federal Government “on its own motion or upon request” — meaning the Authority does not need to wait for a government request before raising a regulatory, supervisory, technical or emerging-risk matter connected to virtual assets, tokenization, stablecoin structures, blockchain, or cyber-risk. This is a policy-shaping role that extends beyond licensing and supervision of the entities the Act directly regulates.

What does the residual power in function nine actually add?

Function nine is a catch-all: PVARA may “do all such acts as may be necessary or incidental to the discharge of its functions and to achieve its objectives under this Act and other applicable laws.” This does not create a new, freestanding power — it authorises the Authority to take reasonably incidental steps in pursuit of the eight functions already listed, rather than granting authority untethered from them. Read narrowly, it is a functional-completeness clause, not a separate ninth mandate.

How do these functions map onto the powers the Act separately grants?

Section 9(1) states what PVARA must do; section 9(2) separately lists the tools it may use to do it — rule-making, licensing decisions, inspections, sanctions, fee-setting, sandbox operation, cooperation arrangements, public education, and committee formation, among others. The table below shows how a selection of the functions connect to those tools:

Function (section 9(1))	Related power (section 9(2))
Licensing, regulation and supervision	Issue, vary, suspend or revoke licences; prescribe licensing conditions
Customer and market protection	Set prudential, conduct, cybersecurity and risk-management standards
Substance-based classification	Make Regulations, standards, directives and guidelines
AML/CFT coordination	Impose administrative sanctions; apply to court for civil or criminal remedies
Responsible innovation	Operate regulatory sandboxes in a transparent and accountable manner

What should an applicant take from PVARA’s function list?

Two conclusions follow directly from section 9(1), without reading beyond it. First, PVARA’s mandate is dual by design — investment attraction and market development sit as named statutory duties alongside customer protection and AML/CFT enforcement, not as competing priorities the Authority balances informally. Second, the substance-over-form classification function means labelling a product or business carefully will not, on its own, place it outside PVARA’s reach — the Authority is statutorily entitled to look at what a product or business actually does, consulting the State Bank of Pakistan or Securities and Exchange Commission of Pakistan where the two mandates genuinely overlap.

About this analysis

This analysis was prepared by the CoinConnect research desk from the Virtual Assets Act, 2026, the PVARA No Objection Certificate Regulations 2025, and the PVARA Sandbox Guidelines 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.