PVARA launches first token sandbox round under new virtual assets law

Pakistan’s newly formed virtual assets regulator has invited applications for the first sandbox phase focused on asset-linked digital tokens, marking one of the first practical steps under the country’s new legal framework for the sector.

According to Dawn, Pakistan Virtual Assets Regulatory Authority (PVARA) has released fresh guidelines for applicants seeking to participate in the initial rollout. The documents lay out who can apply, how the process will work, and the standards regulators will use to assess proposals.

Under the Virtual Assets Act, 2026, asset-referenced tokens are digital assets tied to underlying assets in a way that helps preserve their value. These may reflect ownership interests, claims, or other economic rights linked to assets that generate income, returns, or similar benefits.

The law requires such tokens to be fully supported by the assets they represent. Those backing assets may include physical or non-physical holdings such as commodities, property, securities, financial instruments, or a basket of official currencies. However, they cannot be backed by other virtual assets.

PVARA is also expected to oversee fiat-referenced tokens, another category of stable-value digital assets. These are designed to track the value of a single sovereign currency and must be redeemable by the issuer at face value.

The newly issued sandbox framework appears centred on asset-referenced tokens and places strong emphasis on risk management. Among the requirements is a clear exit plan, with applicants asked to explain how they would shut down the project if it fails or move towards formal licensing if it succeeds.