KARACHI: The State Bank of Pakistan (SBP) has reportedly selected a Japanese firm to develop a central bank digital currency (CBDC), following the federal government’s formal approval of the Virtual Assets Act 2025 last month.

Japanese news outlet Nikkei Asia reported on Tuesday that Soramitsu, a blockchain technology developer based in Japan, is collaborating with the SBP on a pilot programme to introduce a CBDC in Pakistan. The report comes days after SBP Governor Jameel Ahmed announced that the central bank was preparing to launch a pilot project and finalising legislation to regulate digital assets.

The Virtual Assets Act, approved on 9 July, establishes the Pakistan Virtual Asset Regulatory Authority (PVARA), an independent federal body responsible for licensing and supervising entities dealing in virtual assets. Under the new law, all service providers in this domain will be required to obtain licences, meet incorporation and compliance standards, and follow strict reporting obligations.

The law also introduces a regulatory sandbox to facilitate responsible innovation, allowing new technologies and business models to be tested under regulatory oversight. Additionally, PVARA is empowered to issue “no-action” relief letters under specific conditions, offering limited exemptions while ensuring accountability.

Soramitsu to work with central bank as govt enacts Virtual Assets Act 2025

To ensure compliance with Islamic finance principles, a shariah advisory committee will be formed to guide the authority on the permissibility of virtual asset products. Licensed firms offering Islamic financial services must adhere to the committee’s rulings.

The Act also provides for the creation of a virtual assets appellate tribunal to hear appeals against PVARA decisions. The tribunal will operate independently and include experts in law, finance, and technology.

Pakistan’s push into the digital currency space began in 2021 when the SBP included CBDC in its roadmap for banking digitisation. Momentum has grown in recent months, with a recent meeting in Islamabad bringing together bankers, currency dealers, and experts to discuss the future of virtual currencies.

Participants noted growing government interest in integrating digital assets into the financial system. However, experts remain divided on the global viability of such currencies, as many central banks are still hesitant to regulate them.

Pakistan’s move mirrors steps taken by China, India, Nigeria, and several Gulf states, which are testing or launching digital currencies through tightly controlled pilot programmes amid rising interest in blockchain-based payment systems.

Published in Dawn, August 13th, 2025