Transfer and Settlement Services Explained (Schedule I)

Moving a customer’s crypto from one wallet to another looks simple from the outside, but under Pakistan’s Virtual Assets Act, 2026 it is its own licensed activity, separate from trading and separate from custody. Schedule I item 8 defines Virtual Asset Transfer and Settlement Services, and drawing its boundary correctly matters for any business that moves value on behalf of others.

This article sets out what item 8 covers, what it deliberately excludes, and how it fits alongside the Act’s other licence categories.

What are Virtual Asset Transfer and Settlement Services under Schedule I?

Schedule I item 8 defines the category as follows:

Virtual Asset Transfer and Settlement Services includes transfer, transmission, or settlement of Virtual Assets between parties, or from one wallet, address, or location to another, on behalf of customers excluding exchange execution.

At its core, this category covers moving Virtual Assets on a customer’s behalf — between two parties, or between wallets, addresses or locations — where the business is acting as an intermediary carrying out the transfer rather than as the customer’s own wallet software. This is the licence category that applies most directly to remittance-style crypto businesses, payment rails built on Virtual Assets, and any service whose core function is moving value rather than trading it or safekeeping it.

What activities does item 8 actually cover?

Reading the definition closely, three distinct activities sit within scope: transfer of Virtual Assets between parties, transmission of Virtual Assets from one location to another, and settlement of Virtual Asset obligations between parties. The phrase “between parties, or from one wallet, address, or location to another” is broad enough to cover both a peer-to-peer style transfer service and a service that moves assets between a customer’s own wallets or accounts at the customer’s instruction. The unifying feature across all of these is that the activity is carried out “on behalf of customers” — meaning the licence targets a business acting as an intermediary for someone else’s Virtual Assets, not a person moving their own assets between their own wallets.

What does the “excluding exchange execution” carve-out mean, and why does it matter?

The most important word in item 8 is the exclusion at the end: “excluding exchange execution.” This carve-out prevents double-licensing between item 8 and Schedule I item 4, Exchange Services, which separately covers exchanging Virtual Assets for fiat currency, exchanging one or more types of Virtual Assets, matching orders between buyers and sellers, and maintaining an order book. Every trade an exchange executes necessarily involves some movement of assets between accounts as part of settling that trade — without the carve-out, every licensed exchange would also need a separate transfer and settlement licence purely to settle its own trades.

By excluding “exchange execution” from item 8, the Act keeps trade settlement inside the exchange licensing category and reserves the transfer and settlement licence for movement of assets that is not part of executing a trade — for example, a customer withdrawing assets to an external wallet, a remittance business moving assets between two customers who are not trading with each other through an order book, or a payments business settling a merchant transaction in Virtual Assets.

Does a custodial wallet provider automatically need a transfer and settlement licence?

Not automatically, and the answer depends on what the wallet provider actually does. Custody and Administration Services under Schedule I item 3 covers the safekeeping or administration of Virtual Assets or private cryptographic keys on behalf of customers, pursuant to their instructions — a distinct activity from moving assets on the customer’s behalf between locations. A pure custodian that only safeguards assets and executes withdrawal instructions exactly as the customer directs sits primarily within item 3. Where that same business also actively transmits or settles Virtual Assets between parties as part of a broader service offering — rather than simply releasing custody on instruction — it moves into item 8 territory as well, and the two licence categories are not mutually exclusive on the face of the Act. A business offering both custody and active transfer or settlement functionality should expect to need authorisation for both categories of service it actually performs.

How does this service category interact with the travel rule under section 47?

Any business carrying out transfers under item 8 sits squarely within the scope of section 47, the Act’s travel rule and record-keeping provision. Section 47(1) requires a Licensee to obtain, hold and transmit originator and beneficiary information for any transfer of Virtual Assets meeting or exceeding a threshold the Authority prescribes, consistent with Financial Action Task Force recommendations as updated from time to time. A transfer and settlement business is, by definition, the entity best placed to capture and transmit that originator and beneficiary data, since it is the party actually executing the movement of assets between parties. This makes the travel rule obligation one of the central operational requirements for any firm licensed under item 8, alongside the general AML obligations under section 46 that apply to every virtual asset service provider as a deemed financial institution under the Anti-Money Laundering Act, 2010.

How is transfer and settlement different from lending or broker-dealer services?

The distinction is about what happens to the asset, not just who is involved. Lending under Schedule I item 5 involves a contractual obligation for a borrower to return equivalent Virtual Assets at a specified time — the asset changes economic ownership temporarily, with an obligation to return it. Broker-dealer services under item 2 involve arranging or facilitating orders for purchase and sale, or trading on the provider’s own account — the asset changes ownership permanently as part of a trade. Transfer and settlement under item 8 involves neither a loan obligation nor a change of beneficial ownership through a trade — it is simply the movement of an asset from one location to another on a customer’s instruction, whether or not any economic transaction underlies that movement.

What should a firm applying for a transfer and settlement licence prepare?

A firm building toward this licence category as part of its licence application should focus preparation on the areas the Act’s structure makes clear will matter most:

• travel rule infrastructure capable of capturing and transmitting originator and beneficiary data at the threshold the Authority ultimately prescribes under section 47
• clear internal documentation distinguishing which transfers are exchange settlements — excluded from item 8 — and which are standalone transfer or settlement activity, since misclassifying activity risks operating outside the scope of the licence actually held
• AML and CFT controls capable of monitoring transfers in real time, consistent with the obligations under section 46 and the real-time reporting infrastructure required under section 48
• clarity on whether the business will also custody assets between transfers, which would bring item 3 into scope alongside item 8

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.