Section 54 of the Virtual Assets Act 2026 lists six criminal offences, each with its own imprisonment term and fine ceiling. Unlike the administrative sanctions the Pakistan Virtual Asset Regulatory Authority (“PVARA” or “the Authority”) can impose on its own decision, everything in section 54 goes through a court, on a report filed by an authorised officer of the Authority.
This piece works through the six offences one at a time, in the order the Act lists them, as a reference you can return to. Each answer stands on its own — the exact wording, the maximum term, the maximum fine, and nothing more than what the section itself says.
What is the penalty for providing an unlicensed virtual asset service?
Whoever wilfully provides an unlicensed virtual asset service is punishable with imprisonment for a term up to five years, a fine up to fifty million Rupees, or both. This is section 54(1), and it carries the highest imprisonment term and the highest fine ceiling of any offence in the Act.
“Whoever, willfully, provides an unlicensed Virtual Asset Service shall be punishable with imprisonment for a term up to five years, or with fine up to fifty million Rupees, or with both.”
The word “willfully” matters. This is not a strict-liability offence — the prosecution has to establish that the person knew, or intended, that they were providing a service without a licence. Section 50 is the underlying prohibition: no person may engage in a virtual asset service in or from Pakistan unless they are a company incorporated in Pakistan and hold a valid licence from the Authority. Section 54(1) is the criminal consequence of breaching that prohibition wilfully.
What is the penalty for an unauthorised Initial Virtual Asset Offering?
Whoever conducts an Initial Virtual Asset Offering in contravention of the Act, Rules and Regulations is punishable with imprisonment up to three years, a fine up to twenty-five million Rupees, or both. This is section 54(2).
“Whoever conducts an Initial Virtual Asset Offering in contravention of this Act, Rules and Regulations shall be punishable with imprisonment for a term up to three years, or with fine up to twenty-five million Rupees or with both.”
An Initial Virtual Asset Offering, defined at section 3(1)(xiv), is a method of raising funds through the public offering of virtual assets in exchange for funds, other virtual assets, or anything of commercial value. Section 51 prohibits conducting one except in accordance with the Act and its Rules or Regulations, and section 30(1) restricts who may conduct one at all — only legal entities registered in Pakistan meeting the eligibility criteria the Authority prescribes.
What is the penalty for market manipulation or insider trading?
This is the one offence in section 54 with two different penalty structures, depending on whether the offender is a natural person or a legal person. Both flow from wilful contravention of section 52, the market manipulation and insider trading prohibition.
For a natural person, section 54(3)(a) sets imprisonment up to three years, a fine up to twenty-five million Rupees, or both — the same ceiling as the Initial Virtual Asset Offering offence. For a legal person, section 54(3)(b) departs from the fixed-fine model entirely:
“(b) in the case of a legal person, with fine or three times the amount of any profit gained or loss avoided as a result of the contravention. If the amount of profit gained or loss avoided cannot be determined, a fine not exceeding 15% of the total annual turnover of the body corporate in the preceding financial year.”
That is the only penalty anywhere in section 54 with no fixed Rupee ceiling. For a large exchange, 15% of annual turnover can exceed every other fine in the Act combined. This structure deserves its own detailed treatment, which we cover separately.
What is the penalty for making a false or misleading statement to the Authority?
Whoever knowingly makes any false or misleading statement in any application, return or document submitted to the Authority is punishable with imprisonment up to three years, a fine up to twenty million Rupees, or both. This is section 54(4), and its fine ceiling — twenty million Rupees — is lower than the equivalent three-year offences at 54(2) and 54(3)(a), which both cap at twenty-five million.
“Whoever, knowingly, makes any false or misleading statement in any application, return or document submitted to the Authority shall be punishable with imprisonment for a term up to three years, or with fine up to twenty million Pakistani Rupees, or with both.”
This offence attaches to routine paperwork — a licence application, a periodic return under section 22(c), an audit submission, a proof-of-reserves filing under section 27. The standard is “knowingly”, narrower than “willfully” is sometimes read, but still a real filing risk for any operator submitting documents to PVARA on a recurring basis.
What is the penalty for obstructing an authorised officer?
Whoever obstructs an officer of the Authority in the exercise of powers under the Act is punishable with imprisonment up to two years, a fine up to ten million Rupees, or both. This is section 54(5), and it has the second-lowest fine ceiling in the section.
“Whoever, obstructs an officer of the Authority in the exercise of powers under this Act shall be punishable with imprisonment for a term up to two years, or with fine up to ten million Pakistani Rupees, or with both.”
A related but separate offence sits outside section 54 entirely: section 57(3) punishes wilful refusal to provide information required by an authorised officer during an investigation, with imprisonment up to one year, a fine up to one million Rupees, or both — the smallest fine ceiling anywhere in the Act. Obstruction and refusal to provide information are treated as distinct conduct, with different ceilings, even though both arise during an investigation or inspection.
What is the penalty for failing to comply with an order of PVARA?
Whoever wilfully fails to comply with any order or decision of the Authority is punishable with imprisonment up to one year, a fine up to twenty-five million Rupees, and — separately — the Authority may also impose administrative penalties prescribed elsewhere in the Act. This is section 54(6), the last offence in the list.
“Whoever, willfully, fails to comply with any order or decision of the Authority shall be punishable with imprisonment up to one year, or with fine up to twenty-five million Pakistani Rupees and the Authority may also impose administrative penalties prescribed in this Act.”
Note the drafting difference from the other five offences: this one uses “and”, not “or with both”, for the administrative-penalty tail — meaning a court-imposed criminal fine under 54(6) does not exclude the Authority separately using its section 59 administrative sanction powers for the same non-compliance.
The full schedule at a glance
| Section | Offence | Imprisonment | Fine ceiling |
|---|---|---|---|
| 54(1) | Wilfully providing an unlicensed virtual asset service | up to 5 years | up to Rs 50 million |
| 54(2) | Unauthorised Initial Virtual Asset Offering | up to 3 years | up to Rs 25 million |
| 54(3)(a) | Market manipulation or insider trading — natural person | up to 3 years | up to Rs 25 million |
| 54(3)(b) | Market manipulation or insider trading — legal person | — | 3x profit/loss, or up to 15% of turnover |
| 54(4) | Knowingly false or misleading statement to the Authority | up to 3 years | up to Rs 20 million |
| 54(5) | Obstructing an authorised officer | up to 2 years | up to Rs 10 million |
| 54(6) | Wilful non-compliance with an order or decision | up to 1 year | up to Rs 25 million, plus possible administrative penalties |
| 57(3) | Wilful refusal to provide information to an investigator | up to 1 year | up to Rs 1 million |
Every offence uses the “or with both” formulation except 54(6), which pairs the criminal fine with a standing administrative-penalty option. In every case, these are maxima that a court may impose within its discretion — not fixed tariffs applied automatically on conviction.
Who decides these cases, and under what procedure?
Only an authorised officer of the Authority may investigate offences under the Act, under section 56, and no court may take cognizance of an offence except on a written report submitted by that officer, under section 57(4). Prosecutions are conducted by a special public prosecutor appointed by the Federal Government under section 58(1), and the Federal Government may designate one or more Special Courts to hear these matters under section 54(8). Under section 54(7), offences are investigated, tried and punished under the Code of Criminal Procedure, 1898 and the Qanun-e-Shahadat Order, 1984, except where the Act itself provides otherwise.
That procedural framework — investigation, warrant, prosecution and appeal — is common to all six offences and is worth understanding in its own right for any foreign exchange or local operator assessing enforcement risk before entering the licensing regime.
Related reading
- PVARA Exchange License: Capital, Rules & Obligations 2026
- PVARA Transfer & Settlement License: Crypto Payments 2026
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)(xiv), 22, 27, 30, 50, 51, 52, 54, 56, 57 and 58 — 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.
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