Staking as a Regulated Service Under Pakistan's Act

Staking sits in an odd position in most crypto regulatory frameworks: it looks like a technical, almost mechanical activity, yet it also involves holding and deploying someone else’s assets to earn a return. Pakistan’s Virtual Assets Act, 2026 resolves that ambiguity for regulatory purposes by folding staking into a specific, conditional part of its licensing schedule.

This article explains where staking sits in Schedule I, what conditions bring it into scope, and what falls outside the licensing requirement entirely.

Is staking regulated under Pakistan’s Virtual Assets Act 2026?

Staking is regulated, but only when performed on behalf of customers under specific conditions. Schedule I item 7, Virtual Asset Management and Investment Services, brings staking within the Act’s licensing regime where a person is:

acting in a fiduciary or agency capacity for the purpose of managing or administering another Person’s Virtual Assets, including … (b) responsibility for staking on behalf of customers to earn validator or network rewards, provided that such staking is performed on a discretionary basis or forms part of a broader investment management mandate.

Staking is not listed as its own standalone service category in Schedule I. It is treated as one form of the broader Virtual Asset Management and Investment Services category, alongside portfolio or discretionary investment management under item 7(a).

What are the conditions that bring staking into the licensing regime?

Two conditions, read together in item 7(b), determine whether staking on behalf of customers requires a licence: the person must be acting “in a fiduciary or agency capacity” for the purpose of “managing or administering another Person’s Virtual Assets,” and the staking itself must be performed either “on a discretionary basis” or as part of “a broader investment management mandate.”

Both limbs matter. A person could hold customer Virtual Assets and technically operate the staking infrastructure without meeting the fiduciary or agency capacity threshold, and conversely, a person could have a general fiduciary relationship with a customer without the staking itself being discretionary. Our reading is that item 7(b) is intended to catch staking-as-a-service arrangements where the provider decides, on the customer’s behalf, which validator or network to stake with, when to stake or unstake, and how to allocate assets across staking opportunities — decisions that mirror the discretion a portfolio manager exercises under item 7(a).

What does “discretionary” mean in this context?

The Act does not define “discretionary” specifically for staking, but the term is used consistently with its use in item 7(a) for portfolio or discretionary investment management — meaning the service provider, rather than the customer, makes the operative decisions about how the customer’s assets are deployed. A staking arrangement where the customer simply selects a specific validator and instructs the platform to stake with that validator, without the platform exercising judgement over the choice, sits closer to a purely instructional or custodial function than to discretionary management, though the Act does not draw this line explicitly and it would ultimately be for the Authority to classify under its powers in section 9(1)(f).

When is staking NOT a licensable service under Schedule I item 7?

Item 7(b) is drafted narrowly, and several common staking scenarios plausibly fall outside it based on the text:

• an individual staking their own Virtual Assets from their own wallet, since item 7 only applies to managing “another Person’s” assets
• a validator or node operator that runs staking infrastructure but does not hold customer assets or exercise discretion over how they are staked — this looks closer to a technical service than to fiduciary management, though the Act does not address node operation as a distinct category
• non-discretionary staking, where the customer specifies the validator and terms and the provider simply executes the instruction without exercising judgement, if that reading of “discretionary” is correct
• staking that is not “on behalf of customers” at all, such as a firm staking its own treasury assets

None of these exclusions are stated expressly in the Act as carve-outs the way, for example, the broker-dealer exemption in Schedule I item 2 is stated explicitly for a person dealing solely on its own account. They are inferences from the wording of item 7(b) itself, and firms operating in this space should not treat them as settled without Authority guidance.

How does licensed staking interact with custody obligations?

A firm offering discretionary staking on behalf of customers will, in the ordinary course, also be holding or controlling the customer assets being staked, which brings the custody standards under section 26 into play alongside the item 7 licensing requirement. Section 24’s segregation duty and section 24(4)’s prohibition on rehypothecating, lending, pledging or otherwise encumbering Customer Assets without explicit, informed and revocable written consent are directly relevant here: staking necessarily involves locking or deploying the customer’s assets in a way that could be read as encumbering them, so a staking provider needs a clear, documented consent process from each customer that authorises the specific staking activity, distinct from any general terms of service.

What licence category covers a staking business, and what ongoing obligations attach?

A firm whose core business is discretionary staking on behalf of customers falls under the investment services category in Schedule I item 7 and would need to apply through the standard route the Act sets out: a No-Objection Certificate under section 19(1) before incorporation, followed by a full licence application under section 19(4). Once licensed, the ongoing obligations under section 22 apply — maintaining prescribed minimum capital and financial resources, complying with all Regulations and directives, submitting periodic returns and audited financial statements, and maintaining risk-management, compliance and cybersecurity systems.

Because staking involves earning validator or network rewards on the customer’s behalf, a staking provider should also expect scrutiny under the market conduct provisions in Chapter 7, particularly section 41’s duty of integrity and fair dealing and section 44’s conflict-of-interest management requirement — relevant where a provider might, for example, favour a validator that pays the provider a higher commission over one that offers better terms to the customer.

What remains unclear about staking under the Act?

The Act leaves several practical questions to Regulations or to the Authority’s case-by-case classification power under section 9(1)(f): the precise line between discretionary and non-discretionary staking, whether pure validator or node-operation services require any registration, and whether liquid staking derivatives or restaking arrangements are treated as staking under item 7(b), as a form of Asset-Referenced Token issuance, or as something else entirely. Firms building a staking product as part of a broader regulatory licensing application should seek the Authority’s classification of their specific model rather than relying on inference from Schedule I alone, given how much of the boundary depends on the Authority’s own interpretive powers under the Act.

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.