Pakistan

The regulatory opening is already drawing capital and commercial activity. Pakistan's Ministry of Finance signed a memorandum of understanding with Binance in December 2025 to explore tokenisation of up to $2 billion in state-owned assets, an exploratory arrangement running alongside PVARA's issuance of preliminary no-objection certificates to Binance and HTX. Venture investment has followed: Andreessen Horowitz led a $12.9 million funding round for ZAR, a Pakistani startup building a dollar-backed stablecoin aimed at mass adoption through retail agents and kiosks, a landmark stablecoin-focused raise even as the broader fintech venture market contracted sharply. The combination of permanent statutory footing for the regulator, a formal bank-access channel, and inbound institutional capital is the single most consequential development in this baseline cycle for Pakistan's payments environment.

Other Developments

Beneath the virtual-asset headline, Pakistan's conventional payments architecture continues to evolve unevenly. The non-bank e-money sector remains structurally thin eight years into its licensing regime: of the electronic money institutions licensed under the State Bank's 2019 EMI Regulations, revised in June 2023, six remain live as of December 2025, four have exited the market, and six sit at in-principle-approval or pilot stage, with only SadaPay and NayaPay having reached commercial scale. That attrition sits alongside a parallel digital-bank licensing track: five applicants received No Objection Certificates in January 2023 under the January 2022 Digital Bank framework, but their progression to full commercial licensing remains unconfirmed in available research three years on. Customer-fund protection, meanwhile, stands on a settled footing: e-money proceeds must sit in a segregated Trust Account with a licensed bank, reinforced by a rule requiring banks and microfinance banks to compensate customers within two business days for verified cyber-fraud or online-banking-fraud losses, alongside mandated EMVCo 3-D Secure implementation for card payments.

Instant-payments infrastructure continues to mature. Raast, the central bank's real-time payment system, saw its Participation Criteria formalised in February 2025 across 44 onboarded entities, and a parallel central bank digital currency pilot is running alongside the new virtual-asset framework, though its scope and timeline remain sparsely disclosed. Cross-border reach is also extending: NayaPay's December 2025 partnership with Alipay+ enables global QR-based payment acceptance, building on an earlier April 2024 Ant Group tie-up and supplementing the Roshan Digital Account, which has long anchored non-resident remittance inflows through correspondent-banking arrangements and held over $5.2 billion in deposits by late 2022. Scheme infrastructure remains stable, with 1LINK, the domestic PSO/PSP operator of the PayPak card scheme, securing Mastercard Card Personalization Bureau certification in December 2025. Market structure, however, shows divergence: JazzCash and Easypaisa continue to dominate the mobile-wallet landscape with over 15 million active users apiece, even as fintech equity funding contracted 31.5% year-on-year in 2025 to just $5 million across three rounds, a contraction only partly offset by continued strategic investment such as VEON's $20 million injection into Mobilink Microfinance Bank in January 2026 and Mashreq's September 2025 launch of a full-service digital retail bank in Islamabad.

Operational resilience is also being reinforced, if incrementally. The State Bank's 2017 IT security and risk-management framework, which requires banks to establish Security Operations Centers, conduct regular audits, and report major cyber incidents, has been extended by a 2026 Cyber Shield strategy aimed at moving the sector from basic prevention toward institutional resilience and recovery capability, an explicit acknowledgment that legacy systems remain in use across many banks. Settlement infrastructure sits on a similarly established footing: the PRISM real-time gross settlement system, operating under the PRISM RTGS Rules 2008 issued pursuant to the Payment Systems and Electronic Fund Transfers Act 2007, has functioned as Pakistan's large-value settlement backbone since 2008, with 1LINK serving as a special participant for electronic clearing settlement since July 2018.

On enforcement and redress, the State Bank's practice of quarterly disclosure continues, with Rs465.08 million in penalties imposed on ten banks for the quarter ended December 2023 for CDD/KYC, foreign-exchange and AML/CFT lapses, the most recent such disclosure surfaced this cycle, alongside a standing EMI licensing-enforcement precedent in TAG's licence revocation following its collapsed Samba Bank acquisition attempt. Consumer redress runs through a tiered structure culminating in Banking Mohtasib Pakistan, an independent statutory ombudsman that processed over 25,000 complaints and delivered Rs1.26 billion in monetary relief in 2023. On merchant acquiring, a Rs3.5 billion government subsidy programme running from September 2025 through June 2026 has been reimbursing merchants for low-value P2M QR transactions in an economy where more than 85% of transactions remain cash-based, though that programme window has now lapsed as of this cycle's retrieval date with no confirmed follow-on phase.

Cross-Monitor Connections

Two threads in this cycle carry direct cross-monitor relevance for the illicit-finance desk. Pakistan exited the FATF grey list in October 2022 and has remained off both the blacklist and grey list through the 19 June 2026 FATF list update, spanning six consecutive plenaries, a Sentinel-fed data point carried here as payments-context provenance only. Continuing reports of digital-wallet misuse by proscribed organisations, including Jaish-e-Mohammad, are flagged as touching Pakistan's 2018/2021 FATF commitments despite the grey-list exit, and commentary warns that renewed FATF pressure could damage correspondent-banking relationships and jeopardise the IMF Extended Fund Facility given its own AML/CFT conditionalities. Both signals have been routed to FIM as cross-monitor flags; WPM's own analytical interest is confined to the structural correspondent-banking access implications for Pakistan's payments sector, not an independent illicit-finance assessment.

Outlook

The trajectory across Pakistan's payments environment this cycle is one of liberalisation running ahead of implementation detail. The Virtual Assets Act 2026 and its bank-access circular establish the legal architecture for a licensed digital-asset economy, but the reserve and redemption rulebook that will determine how fiat-backed stablecoins actually operate remains unpublished, and the current commercial-licensing status of the 2023 digital-bank NOC cohort needs verification before it can be treated as resolved. Watch for three things over the coming cycles: publication of PVARA's reserve and redemption rulebook, confirmation of whether any of the five digital-bank NOC holders convert to commercial licences, and whether the lapsed P2M subsidy programme is renewed given the economy's continued reliance on cash. The correspondent-banking and FATF-adjacent vulnerability flagged in this cycle also bears monitoring, since any deterioration would compound the access asymmetry already visible between bank-channel and non-bank EMI participants in Pakistan's payments market.

Outlook

Pakistan's regulatory direction is unambiguously liberalising on virtual assets while remaining structurally cautious on correspondent-banking exposure; the jurisdiction's risk profile is assessed as elevated and escalating, driven jointly by the pace of virtual-asset market opening and the persistence of FATF-adjacent vulnerability. Verification of the digital-bank NOC cohort's commercial-licensing status and publication of PVARA's reserve and redemption rulebook are the two clearest items to track into the next cycle.