SECP Compliance for Crypto Startups in Pakistan
Blockchain and crypto startups operating in or from Pakistan face a complex regulatory landscape. While Pakistan has not yet enacted a comprehensive cryptocurrency law, the Securities and Exchange Commission of Pakistan (SECP) has established corporate, compliance, and governance requirements that directly affect any startup intending to build blockchain-based products, token platforms, exchanges, or fintech services.
From a legal perspective, the absence of a dedicated crypto statute does not mean absence of regulation. Instead, startups must navigate existing company law, securities law, AML/CFT obligations, and technology governance frameworks under SECP oversight.
1. Company Incorporation and Legal Form
The starting point is incorporation under the Companies Act, 2017, which requires registration of a legal entity through the SECP’s e-services portal
https://eservices.secp.gov.pk
SECP also expects proper corporate governance from day one. This includes:
- Appointment of directors and a company secretary
- Maintenance of statutory registers and books of account
- Annual financial statements and filings through SECP’s online system
https://www.secp.gov.pk/document/companies-act-2017/
The Memorandum of Association (MoA) must clearly define the business objects. Vague language such as “technology services” is risky. If the business involves digital assets, tokens, wallets, exchanges, or blockchain infrastructure, those activities should be expressly disclosed to avoid future compliance objections.
On the compliance side, startups must align with Pakistan’s anti-money laundering framework under the Anti-Money Laundering Act, 2010
https://www.fmcu.gov.pk/aml-act-2010/
This means implementing:
- Customer identification (KYC)
- Record keeping of transactions
- Suspicious transaction monitoring and reporting where applicable
Even if crypto-specific rules are evolving, regulators can still act using general AML and cybercrime powers, including coordination with the Federal Investigation Agency (FIA) cybercrime wing
https://fia.gov.pk/ccw
Banking and payment integrations also bring scrutiny. The State Bank of Pakistan (SBP) has issued cautionary guidance on virtual currencies, so any fiat on-ramp or off-ramp arrangement must be structured carefully to avoid violating banking restrictions
https://www.sbp.org.pk
2. Disclosure of Nature of Crypto Activities
SECP increasingly scrutinizes companies whose objects suggest:
- Virtual asset trading or exchange
- Token issuance or fundraising
- Custody of client digital assets
- Payment or remittance using crypto rails
Founders should be prepared to explain their operational model, risk controls, and whether they hold or transmit client funds. Misrepresentation or concealment can trigger enforcement under false statement and fraud provisions of company law.
3. Securities Law and Token Classification
If a startup issues tokens to raise capital, SECP may assess whether those tokens qualify as “securities” under the Securities Act, 2015.
If a token has characteristics of:
- profit expectation,
- investment of money,
- reliance on managerial efforts,
it may be treated like shares or investment contracts. In that case, public offering without SECP approval would be unlawful, exposing founders to penalties and investor refund orders.
Utility or payment tokens still carry legal risk if marketed as investments.
4. AML/CFT and Financial Integrity Obligations
Even in the absence of a full crypto licensing regime, Pakistan’s anti-money laundering framework applies broadly.
Startups that:
- onboard users,
- move value,
- provide wallets or exchange services,
may be viewed as financial intermediaries in substance. This creates expectations of:
- customer identification (KYC)
- transaction monitoring
- suspicious transaction reporting
- internal compliance controls
Failure to implement AML safeguards can attract investigation under AML Act 2010 and related rules, regardless of technology used.
5. Foreign Investment and Cross-Border Structuring
Many Pakistani founders register offshore entities (e.g., UAE, BVI, Singapore) while maintaining development teams in Pakistan.
This structure raises issues of:
- foreign exchange compliance
- profit repatriation
- tax obligations
- disclosure of foreign shareholding to SECP and SBP
Undisclosed offshore fundraising or token sales can create both corporate and foreign exchange violations.
6. Data Protection and User Rights
Blockchain startups processing user data must comply with general data protection and cybersecurity duties.
Key legal expectations include:
- secure storage of personal data
- clear privacy policies
- breach notification and incident response capability
Using decentralized architecture does not remove responsibility for data misuse if the company controls onboarding or interfaces.
7. Marketing and Public Communications
Publicly advertising token sales, guaranteed returns, or investment opportunities without regulatory clearance is legally hazardous.
SECP can treat misleading promotion as:
- unlawful public offering
- fraud or deceptive business practice
All investor-facing material should avoid promises of profit and clearly describe risk.
8. Practical Compliance Strategy
Until Pakistan introduces a dedicated crypto licensing regime, prudent startups should adopt a conservative, compliance-first approach:
- incorporate transparently with accurate business objects
- avoid public token fundraising without legal opinion
- implement AML/KYC proportional to risk
- segregate client assets from company funds
- maintain auditable records and governance controls
Early legal structuring is far cheaper than post-facto regulatory defence.
Conclusion
Operating a blockchain or crypto startup in Pakistan is legally possible but requires careful alignment with existing SECP company and securities frameworks. The regulatory vacuum around crypto is not a safe harbour; it is an uncertainty zone where general financial and corporate laws still apply.
Startups that treat compliance as core infrastructure, rather than an afterthought, will be best positioned to survive future regulation and attract institutional investment.
This article is legal commentary for informational purposes only and not formal legal advice.
The information provided in this article is for general informational purposes only and does not constitute legal or financial advice.
Author & Crypto Consultant
Shahid Jamal Tubrazy (Crypto & Fintech Law Consultant)
Shahid Jamal Tubrazy, a certified top expert in Crypto Law from Duke University, is a leading authority in the cryptocurrency and blockchain space. As a seasoned Fintech lawyer, he offers a full spectrum of services, including licensing, legal guidance for ICOs, STOs, DeFi, and DAOs, as well as specialized expertise in crypto mediation, negotiation, and mergers and acquisitions. With a proven track record and published works on Blockchain Regulation and Cryptocurrency Laws, Shahid provides unparalleled insights into the complexities of the fintech world, ensuring compliance and strategic success. 🌐💼 #CryptoLaw #Fintech #Blockchain #LicenseServices #CryptoMediator #MergersAndAcquisitions #CryptoCompliance #FrozenAssetsrecovery.
EMAIL: shahidtubrazy@gmail.com
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