ISLAMABAD: Pakistan Virtual Assets Regulatory Authority has launched the first sandbox round under the country’s new digital asset law, inviting firms to test asset-linked tokens in a controlled regulatory environment.

The move marks one of the earliest practical implementations of the Virtual Assets Act, 2026, as Pakistan steps toward formal oversight of the emerging crypto sector.

According to guidelines released by the regulator, the initial sandbox phase will focus on asset-referenced tokens — digital instruments tied to underlying assets such as commodities, real estate, financial securities, or currencies. These tokens must be fully backed by tangible or financial assets and cannot derive value from other virtual assets.

The framework outlines eligibility criteria, evaluation standards, and operational requirements for applicants. It places strong emphasis on investor protection and financial stability, requiring participants to demonstrate robust risk management systems.

A key condition is the inclusion of a clear exit strategy. Applicants must explain how projects will be wound down in case of failure or transitioned into full regulatory licensing if successful.

The authority is also expected to regulate fiat-referenced tokens, designed to maintain parity with a single sovereign currency and redeemable at face value.

The sandbox initiative signals Pakistan’s cautious but structured approach to integrating blockchain-based finance, balancing innovation with regulatory safeguards.