Pakistan has spent the better part of a decade treating cryptocurrency as something between a regulatory blind spot and an unofficial prohibition. That era is ending. In March 2026, Parliament passed the Virtual Assets Act 2026, creating the Pakistan Virtual Assets Regulatory Authority (PVARA) and formally legalizing crypto under a structured regulatory framework. Now, ahead of the federal budget on June 10, the government is expected to introduce a capital gains tax on cryptocurrency profits, most likely structured as a rate between 15% and 30% on gains.
For a country with an estimated 20 to 30 million cryptocurrency users (one of the highest adoption rates in the world by population, consistently ranked in the top five by Chainalysis), the shift from ban-adjacent ambiguity to regulated taxation represents a fundamental change in the relationship between Pakistani crypto holders and the state. Here is what is being proposed, what the new framework means in practice, and what the gaps are.
What the Budget Is Actually Proposing: Section 37C
A new clause in the Income Tax Ordinance targeting crypto capital gains specifically
The government is expected to amend Section 37 of the Income Tax Ordinance 2001 by adding a new Section 37C specifically covering capital gains on virtual assets. The proposed CGT rate spans a range depending on the final budget text: reports from multiple sources indicate figures between 15% and 30%, with 20-30% the more frequently cited band. The IMF, which has been a party to the policy discussions, pushed for crypto to be brought into the tax net as part of its revenue conditions for Pakistan’s ongoing stabilisation programme. The tax would apply to profits realised on sale or exchange of virtual assets, and PVARA-registered exchanges would be expected to generate the reporting infrastructure that makes this verifiable.
The exact implementation mechanics (holding period differentiation, treatment of losses, reporting thresholds) are expected to be clarified through the Finance Bill 2026 once tabled in Parliament.
The Regulatory Foundation: Virtual Assets Act 2026
Pakistan moved from prohibition to licensing in a single parliamentary session
The foundation for the crypto tax is the Virtual Assets Act 2026, passed by Parliament in March 2026. The Act converts an earlier ordinance into permanent law and grants PVARA sweeping authority to issue, suspend, or revoke licences for cryptocurrency exchanges, custodians, wallet providers, token issuers, and other virtual asset service providers (VASPs) operating in or targeting Pakistan.
The licensing requirements are demanding by regional standards. Exchanges seeking authorisation must demonstrate recognition by a major regulatory jurisdiction (United States, European Union, or Singapore), meet capital requirements set by PVARA, and align with Sharia financial principles as evaluated by an Islamic finance panel. Anti-money laundering and counter-terrorism financing (AML/CFT) standards must meet Pakistan’s Financial Monitoring Unit requirements.
Binance and HTX (formerly Huobi) received No Objection Certificates from PVARA in December 2025, initiating their registration processes. Neither has yet received a full operational licence, but the trajectory is clear: major global exchanges are engaging with Pakistan’s regulatory process rather than operating in a grey zone.
Who Gets Hit: The 20-30 Million Users Pakistan Is Now Counting
A user base the government previously could not see is about to become very visible
Estimates of Pakistan’s cryptocurrency user base vary, which is itself a product of the regulatory vacuum that existed until March 2026. The 9 million figure that appeared in early 2026 media reports likely reflects registered exchange accounts on platforms that voluntarily shared data. Chainalysis’s Global Crypto Adoption Index has consistently ranked Pakistan in the top five globally by grassroots adoption, with more recent estimates from the PVARA framework discussions putting the active user base at 20 to 30 million. Pakistan’s $300 billion crypto market reference, cited in the Virtual Assets Act 2026 context, reflects cumulative transaction volume rather than market capitalisation.
The user base skews young, urban, and male. A significant portion uses crypto as a dollar hedge given Pakistan’s currency volatility history. Another segment engages in remittance-adjacent activities, where crypto has served as an informal channel for converting overseas earnings into local currency outside the banking system. Both of these use cases have tax implications under the proposed framework that are more complex than simple trading gains.
The Exchange Question: Who Reports What, and When
PVARA’s licensing process is the mechanism through which the tax becomes enforceable
A crypto capital gains tax is only as effective as the reporting infrastructure supporting it. Pakistan’s CGT proposal is meaningful precisely because it arrives alongside the Virtual Assets Act’s licensing regime: exchanges operating in Pakistan legally will be required to maintain user KYC records, report transaction data to PVARA and the Federal Board of Revenue, and flag high-value transactions for AML review.
For users trading on licensed platforms like Binance or HTX (once they receive full licences), tax liabilities will be systematically trackable. For users on unlicensed platforms or using peer-to-peer trading, the enforcement gap will persist in the near term. PVARA’s challenge is to move enough trading volume onto licensed platforms to make the CGT functionally comprehensive, rather than a theoretical obligation that sophisticated users route around.
The FBR is also expected to use PVARA data to cross-reference crypto holdings against declared income and asset statements, consistent with the AI-powered income tax pilot that the PM ordered for Islamabad. Crypto holdings that appear in exchange records but not in tax returns will become an audit trigger.
What This Means
Pakistan’s crypto tax is not a hostile move. It is the revenue-collection side of a regulatory recognition that has been under construction since late 2024. The government has legalised crypto, is licensing exchanges, and is now asking users to pay CGT on profits, in the same sequence that most mature crypto markets followed. The IMF backstory is real, and the revenue motive is clear, but the architecture being built around it (PVARA, licensing, AML compliance) is the infrastructure of a regulated market, not a crackdown.
The users who should pay attention most urgently are those who have accumulated significant gains on unlicensed platforms or P2P trades and have not accounted for these in their tax returns. The arrival of licensed exchanges with mandatory FBR reporting, combined with FBR’s increasingly data-driven audit approach, changes the risk calculus for undeclared crypto gains in a material way. The window for informal crypto activity is narrowing, not because the government is hostile to crypto, but because it has decided to treat it like any other taxable asset.
