How it works in Pakistan
Yes, you can pay your team in Pakistan in stablecoins with Toku. Salary is set, withheld and paid in rupees, through a bank where the wage laws require it, and Toku confirms for each employee and freelancer how a USDC or USDT option can be offered under PVARA's and the State Bank's rules before the first payment.
Paying employees
The Payment of Wages Acts require the wages they cover in currency, and in Sindh and Khyber Pakhtunkhwa through banks, and PVARA's 2026 regulations bar crypto as a means of payment for domestic commercial transactions without State Bank approval, so the salary is paid in rupees first. Toku confirms for each employee whether a USDC option for net pay can be offered through a PVARA-licensed route before the first payment. (Sources: Payment of Wages Act, 1936, section 6 (Pakistan Code); Sindh Payment of Wages Act, 2015, section 6; Khyber Pakhtunkhwa Payment of Wages Act, 2013, section 6; PVARA, Pakistan Virtual Asset Services Regulations, 2026, S.R.O. 1419(I)/2026)
Paying contractors
Freelancers can invoice in US dollars or rupees. The State Bank's freelancer rules and the export-of-services tax are built around foreign currency arriving through a bank, and none of the official sources we reviewed addresses stablecoin receipts, so Toku confirms the USDC or USDT settlement route for each freelancer before the first payment. (Sources: State Bank of Pakistan, EPD Circular Letter No. 06 of 2026: IT companies and freelancers, Foreign Exchange Manual chapter 12; Income Tax Ordinance, 2001, amended to February 20, 2026 (Federal Board of Revenue))
Salary is set and taxed in local currency. Employees who opt in have their net pay, once paid, converted into USDC, and contractors are settled in USDC or USDT, where the local rules allow it. Toku handles the conversion, the compliance checks and the tax and payment reporting, and confirms the arrangement for each person before the first payment.
How Pakistan treats crypto and stablecoins
The Virtual Assets Act 2026 makes providing virtual asset services a licensed activity and states that virtual assets are not legal tender. The Income Tax Ordinance taxes gains on capital assets, defined as property of any kind, and has no provision written for virtual assets. (Sources: Virtual Assets Act, 2026 (Act XIII of 2026), Gazette of Pakistan (National Assembly copy); Income Tax Ordinance, 2001, amended to February 20, 2026 (Federal Board of Revenue))
The Virtual Assets Act 2026 states that virtual assets are not legal tender. In 2018 the State Bank of Pakistan had told banks, microfinance banks and payment operators not to process, use, trade, hold or transfer virtual currencies, and to report any such transaction to the Financial Monitoring Unit. (Sources: Virtual Assets Act, 2026 (Act XIII of 2026), Gazette of Pakistan (National Assembly copy); State Bank of Pakistan, BPRD Circular No. 03 of 2018 on virtual currencies (April 6, 2018))
On May 21, 2026, the State Bank replaced that circular. Banks may now open accounts for virtual asset service providers licensed by PVARA, but client money accounts must be in rupees with no cash deposits or withdrawals, banks still may not invest in, trade or hold virtual assets themselves, and foreign exchange regulations continue to apply. (Source: State Bank of Pakistan, BPRD Circular Letter No. 10 of 2026 on bank accounts for PVARA-licensed providers (May 21, 2026))
The Virtual Assets Act 2026 took effect on March 4, 2026 and makes PVARA the licensing regulator. Wilfully providing a virtual asset service without a licence is a crime punishable by up to five years in prison, a fine of up to Rs 50 million, or both. Issuers of fiat-referenced tokens, or stablecoins, must hold 100% reserve backing and offer redemption at par. The Act overrides other laws where they conflict, with exceptions that include the Foreign Exchange Regulation Act 1947. (Source: Virtual Assets Act, 2026 (Act XIII of 2026), Gazette of Pakistan (National Assembly copy))
PVARA's Virtual Asset Services Regulations, notified on August 21, 2026, say virtual assets must not be used or recognised as a means of payment for domestic commercial transactions unless the State Bank specifically approves it. A virtual asset service may be regarded as carried on in Pakistan if it targets, solicits or onboards people in Pakistan, including through payment rails, though the regulations also set out steps a foreign provider can take to stay outside that test, such as not marketing to or onboarding people in Pakistan. (Source: PVARA, Pakistan Virtual Asset Services Regulations, 2026, S.R.O. 1419(I)/2026)
Local rules for paying employees in Pakistan
Section 6 of the federal Payment of Wages Act 1936 says all wages must be paid in current coin or currency notes. The Act covers people employed in factories, industrial or commercial establishments and on railways. (Source: Payment of Wages Act, 1936, section 6 (Pakistan Code))
The provinces have their own versions. In Sindh, wages must be paid in current currency by crossed cheque or bank transfer through a scheduled or commercial bank, with a pay slip. In Khyber Pakhtunkhwa, wages must be paid in current currency through scheduled banks. (Sources: Sindh Payment of Wages Act, 2015, section 6; Khyber Pakhtunkhwa Payment of Wages Act, 2013, section 6)
Separately from wage law, PVARA's 2026 regulations bar using virtual assets as a means of payment for domestic commercial transactions without the State Bank's approval. Where the wage Acts apply, salary is paid in currency, and taxable salary under the Income Tax Ordinance includes any perquisite, whether or not it can be converted into money. (Sources: PVARA, Pakistan Virtual Asset Services Regulations, 2026, S.R.O. 1419(I)/2026; Income Tax Ordinance, 2001, amended to February 20, 2026 (Federal Board of Revenue))
Local rules for paying contractors in Pakistan
The State Bank's foreign exchange rules define freelancers as Pakistan residents paid from abroad for online services. Banks open a special foreign currency account for them alongside their rupee account, and freelancers may keep USD 5,000 a month or 50% of their export proceeds, whichever is higher, in that account, and the funds can be converted to rupees on request. (Source: State Bank of Pakistan, EPD Circular Letter No. 06 of 2026: IT companies and freelancers, Foreign Exchange Manual chapter 12)
Since April 2026, banks process freelancers' inward receipts on a one-time declaration of the service provided, so freelancers no longer file a form for each receipt. When a bank realises foreign exchange proceeds from services exported from Pakistan it deducts tax under section 154A of the Income Tax Ordinance: 0.25% for IT exporters registered with the Pakistan Software Export Board, for tax years 2024 to 2029 after the Finance Act 2026 extended it, and 1% otherwise. (Sources: State Bank of Pakistan, EPD Circular Letter No. 06 of 2026: IT companies and freelancers, Foreign Exchange Manual chapter 12; Income Tax Ordinance, 2001, amended to February 20, 2026 (Federal Board of Revenue); Finance Act, 2026 (Act XLIII of 2026), Gazette of Pakistan, June 26, 2026 (National Assembly))
These rules are built around money that arrives through a bank. None of the State Bank, PVARA or tax authority sources we reviewed says whether a stablecoin payment to a freelancer's own wallet is allowed or must be converted and brought in through a bank. PVARA's domestic payment bar covers domestic commercial transactions, which a payment from a foreign client may not be. (Sources: State Bank of Pakistan, EPD Circular Letter No. 06 of 2026: IT companies and freelancers, Foreign Exchange Manual chapter 12; PVARA, Pakistan Virtual Asset Services Regulations, 2026, S.R.O. 1419(I)/2026)
Ways to pay people in Pakistan, compared
How the common ways to pay someone in Pakistan compare. The Toku row describes how Toku works; coverage and the arrangement for each person are confirmed before the first payment.
| Method | Employees | Contractors | What to keep on record |
|---|---|---|---|
| Local payroll and bank transfer in PKR | Salary paid in local currency, with tax and contributions withheld. No stablecoin option. | Paid in PKR or another fiat currency to a bank account. | Payslip or invoice, payment confirmation and any tax withheld. |
| Sending USDC or USDT yourself | Doesn't cover employees on its own: salary still has to be set, withheld and paid under local payroll rules. | You handle the payment, foreign-exchange, tax and reporting rules in Pakistan yourself, and some payment rules there may restrict it. | The PKR value on the payment date, the exchange rate used, wallet addresses and transaction hashes. |
| Toku | Salary set, withheld and paid in PKR through Toku's employer of record, with a USDC option for net pay arranged as described on this page. | Invoices in PKR (or USD where local invoicing rules allow it), settled in USDC or USDT where Toku confirms the route for that contractor, with approvals and payment records in one place. | Contracts, invoices, payment records and tax documents kept with each payment. |
Tax and reporting
The Income Tax Ordinance 2001, as amended to February 2026, has no provision written for virtual assets, and we found none in the Finance Act 2026. Gains on disposing of a capital asset, defined as property of any kind, are taxed under the head capital gains, and taxable salary includes perquisites whether or not they can be converted into money. (Sources: Income Tax Ordinance, 2001, amended to February 20, 2026 (Federal Board of Revenue); Finance Act, 2026 (Act XLIII of 2026), Gazette of Pakistan, June 26, 2026 (National Assembly))
Foreign exchange proceeds from exported services are taxed when a bank realises them, at 0.25% for registered IT exporters (tax years 2024 to 2029, after the Finance Act 2026 extended it) or 1% otherwise. Licensed virtual asset service providers must comply with income tax obligations and Federal Board of Revenue rules under section 66 of the Virtual Assets Act. (Sources: Income Tax Ordinance, 2001, amended to February 20, 2026 (Federal Board of Revenue); Finance Act, 2026 (Act XLIII of 2026), Gazette of Pakistan, June 26, 2026 (National Assembly); Virtual Assets Act, 2026 (Act XIII of 2026), Gazette of Pakistan (National Assembly copy))
Recent changes
- July 2025: The Virtual Assets Ordinance 2025 was promulgated, according to PVARA. It later lapsed, and the 2026 Act preserved what was done under it. (Sources: PVARA: about the authority; Virtual Assets Act, 2026 (Act XIII of 2026), Gazette of Pakistan (National Assembly copy))
- March 4, 2026: The Virtual Assets Act 2026 took effect, making PVARA the licensing regulator and giving existing providers six months to apply for a licence or stop. (Sources: Virtual Assets Act, 2026 (Act XIII of 2026), Gazette of Pakistan (National Assembly copy); Pakistan Code: Virtual Assets Act, 2026)
- April 6, 2026: The State Bank revised its foreign exchange rules for IT companies and freelancers, with a one-time declaration for inward receipts. (Source: State Bank of Pakistan, EPD Circular Letter No. 06 of 2026: IT companies and freelancers, Foreign Exchange Manual chapter 12)
- May 21, 2026: The State Bank replaced its 2018 ban: banks may open accounts for PVARA-licensed providers, with client money accounts in rupees. (Source: State Bank of Pakistan, BPRD Circular Letter No. 10 of 2026 on bank accounts for PVARA-licensed providers (May 21, 2026))
- August 21, 2026: PVARA notified its Virtual Asset Services Regulations and Activity Specific Regulations, barring crypto as a means of payment for domestic commercial transactions without State Bank approval. (Sources: PVARA, Pakistan Virtual Asset Services Regulations, 2026, S.R.O. 1419(I)/2026; PVARA, Activity Specific Regulations, 2026, S.R.O. 1420(I)/2026; PVARA: regulations and legal framework)
What the official sources leave open
The official sources leave these points open. Where one affects a payment, Toku confirms how it is handled for each person before the first payment.
- Whether a Pakistan-resident freelancer may receive USDC or USDT from a foreign client, and whether those receipts must be converted and brought in through a bank.
- Whether a foreign company paying people in Pakistan in stablecoins targets or onboards people in Pakistan under PVARA's regulations and so needs a PVARA licence.
- Whether the Payment of Wages Acts, which cover factory, industrial, commercial and railway employment, reach every office or remote employee. No official statement on paying salary in crypto was found.
- How crypto received as salary or fees, or gains on crypto, are valued and taxed. No Federal Board of Revenue circular on virtual assets was found.
- Punjab's own wage law, and how the State Bank would approve any virtual asset as a domestic means of payment.
How Toku pays your team in Pakistan
Employees hired through Toku’s employer of record have their salary set, withheld and paid in local currency, with the USDC option for net pay arranged as described above through stablecoin payroll. Contractors are paid through contractor management, which keeps invoices, approvals and USDC or USDT payment records together. Toku confirms the arrangement for each person before the first payment.
For the practical steps, see how to pay contractors in Pakistan. Compare costs on the pricing page and estimate transfer costs with the FX savings calculator.
Toku pioneered this approach: founded in 2020, it started with token payroll and is now an employer of record and global payroll provider in 100+ countries, paying teams in local currency or stablecoins. About Toku.
This guide is general information, not legal or tax advice. Rules on crypto, wages and foreign exchange change often and depend on the facts of each arrangement, so confirm your situation with a qualified local adviser before you pay anyone in crypto or stablecoins.