What Is Pakistan's Strategic Digital Wallet Company?

Section 38 of the Virtual Assets Act, 2026 creates a wholly state-facing entity that sits apart from the rest of the Act’s licensing architecture: the Strategic Digital Wallet Company. It is not a Virtual Asset Service Provider (VASP), it does not apply for a licence, and by the Act’s own terms it cannot serve a private client. This article sets out exactly what section 38 permits, and what it means for anyone assessing Pakistan’s virtual asset market.

What is the Strategic Digital Wallet Company under section 38?

Section 38(1) allows the Federal Government to establish or designate, under the Companies Act, 2017, a wholly owned company to be known as the Strategic Digital Wallet Company (SDWC). Its stated purpose is to perform custody and administration services, and to design, develop, operate and secure wallet infrastructure enabling the Government of Pakistan or other designated public bodies to manage, transfer and record virtual assets in furtherance of the company’s strategic reserve objectives.

Section 38(1) states:

The Federal Government may establish or designate, under the Companies Act, 2017 (XIX of 2017), a wholly owned company to be known as the Strategic Digital Wallet Company (SDWC) to perform custody and administration services, and to design, develop, operate and secure wallet infrastructure that enables the Government of Pakistan or other designated public bodies or institutions to manage, transfer and record Virtual Assets in furtherance of the Company’s strategic reserve objectives.

Two structural facts follow directly from that wording. First, the SDWC’s legal form is a company under the Companies Act, 2017, not a statutory body created directly by the Virtual Assets Act itself — the Act only authorises the Federal Government to establish or designate it. Second, the Federal Government’s power is discretionary (“may establish”), meaning section 38 creates the legal mechanism for an SDWC to exist, without itself bringing one into being.

What does “strategic reserve objectives” mean in section 38?

The Act does not define “strategic reserve objectives” anywhere in section 3’s definitions or elsewhere in the text. The phrase appears once, in section 38(1) itself, connecting the SDWC’s custody and wallet-infrastructure functions to some broader government reserve purpose involving virtual assets.

Our reading is that this points toward a sovereign or public-sector virtual asset holding function — comparable in concept to a strategic commodity reserve, but for virtual assets held by the state or its designated bodies — though the Act gives no further detail on what such a reserve would hold, at what scale, or under what governance. This is inference from context, not a defined term, and anyone relying on the concept of a state virtual asset reserve should treat it as an open policy question rather than a settled legal structure.

Can the Strategic Digital Wallet Company serve private customers?

No. Section 38(2) is explicit and leaves no room for interpretation: the Company shall operate exclusively on behalf of the Government of Pakistan and designated public bodies and shall not provide services to private persons.

Section 38(2) states:

The Company shall operate exclusively on behalf of the Government of Pakistan and designated public bodies and shall not provide services to the private persons.

This is an absolute bar, not a licensing condition that could later be varied. Unlike a VASP’s licence under section 21, which specifies the services a Licensee is permitted to undertake and can, in principle, be varied by the Authority under section 23, section 38(2)’s prohibition on serving private persons is written directly into the Act itself. Changing it would require amending the Act, not a Regulation or a licence condition issued by PVARA.

Is the Strategic Digital Wallet Company a licensed VASP?

No, and this is one of the more important structural points about section 38. The SDWC is not created as, and does not appear to require, a licence under section 18 and Schedule I of the Act — the same licensing regime that applies to every other entity providing Virtual Asset Services in Pakistan. Section 38 sits in Chapter 6 of the Act, alongside cybersecurity, sandbox and innovation provisions, rather than in Chapter 3, which governs licensing.

Feature	Ordinary VASP	Strategic Digital Wallet Company
Legal basis	Section 19 licence application, following incorporation	Section 38 establishment or designation by the Federal Government
Who it may serve	Any customer within its licensed scope	Exclusively the Government of Pakistan and designated public bodies
Licensing regime	Full licensing under sections 18-23	Not licensed under Schedule I
Governing chapter	Chapter 3, Licensing	Chapter 6, Cybersecurity, Sandbox and Innovation

This does not mean the SDWC operates outside any obligation whatsoever — the Act does not say so — but it does mean the SDWC sits outside the licensing framework that governs private-sector custody, exchange, broker-dealer and other Virtual Asset Services. The Act is silent on what supervisory or reporting relationship, if any, exists between PVARA and a future SDWC beyond the fact that both are created under the same statute.

Why does section 38 matter for a private VASP or investor?

Section 38 is not a competitive threat to a private-sector VASP in the ordinary sense, because the statutory bar in section 38(2) prevents the SDWC from competing for private customers at all. Its relevance to a private business is more structural:

• it signals that the Pakistani state envisages holding its own virtual asset reserve through dedicated custody infrastructure, separate from the commercial VASP ecosystem the rest of the Act licenses
• it shows the Act distinguishing sharply between commercial custody services, which require a licence and serve private customers, and sovereign custody infrastructure, which does not
• because the SDWC has no customer-facing role, a private VASP evaluating market entry to Pakistan does not need to model it as a competitor, but should be aware it may become a counterparty in any future government-linked virtual asset activity

Has a Strategic Digital Wallet Company actually been established?

The Act does not itself establish an SDWC — section 38(1) only gives the Federal Government the power to do so. None of the source documents reviewed for this article contain a notification, incorporation record, or further Regulation confirming that an SDWC has actually been established or designated. A business or investor should verify current status directly with the relevant Pakistani authorities rather than assuming the power in section 38 has been exercised.

What should a VASP or investor take from section 38?

• treat the SDWC as a distinct, state-facing structure that does not affect a private VASP’s licensing path or customer base, since section 38(2) bars it from serving private persons entirely
• do not assume the SDWC is subject to the same licensing, capital, or custody-standard obligations that apply to private Licensees under sections 18-29, since the Act places it outside that regime
• watch for future notifications or Regulations that clarify the SDWC’s governance, its relationship with PVARA, and the scope of the “strategic reserve objectives” the Act references but does not define
• confirm current establishment status independently, since section 38(1) is an enabling power rather than confirmation that an SDWC currently exists

Section 38 is a narrow but clear provision: it gives Pakistan the legal mechanism for a state-owned virtual asset custody vehicle, and it draws a hard line preventing that vehicle from ever competing with the private Virtual Asset Service Provider market the rest of the Act exists to license and regulate.

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.