Bold headline: Pakistan’s SECP overhauls digital asset management with new DAMS rules
The Securities and Exchange Commission of Pakistan (SECP) has introduced fresh requirements for delivering Digital Asset Management Services (DAMS) via Digital Asset Management Companies (Digital AMCs). This update is formalized through S.R.O. 1438(I)/2025, which amends the Non-Banking Finance Companies and Notified Entities Regulations, 2008.
Key definitions and scope: The regulations define a “Digital Platform” as any tool, app, software, or solution that uses digital or IT interfaces as the primary means of interaction among the Digital AMC, investors or unitholders, and other participants in the DAMS process. This broad category includes mobile apps, web portals, internet channels, digital distribution or aggregation platforms, and other enabling or supportive services. The rules apply to Digital AMCs that provide DAMS or digital services through Digital Platforms, and to all Digital Platforms owned, administered, or managed by these AMCs.
Eligibility and licensing details: After receiving permission under Rule 4 of the Rules, a Fund Management NBFC must, in addition to meeting all license criteria in Rule 5, clearly indicate the intent to obtain a DAMS license in Form-II of the NBFC Rules. The SECP may grant an AMS license with a condition: the AMC may provide DAMS only via digital platforms. Any Fund Management NBFC seeking to run DAMS must accompany its license application with a viable five-year business plan and robust financial projections, including underlying assumptions. The plan should cover, but not be limited to, the following areas:
- A clear articulation of DAMS objectives and market strategy
- Revenue models, cost structures, and funding requirements
- Operational blueprint for digital platforms, including risk management and compliance controls
- Projected assets under management, growth scenarios, and profitability timelines
- Governance, internal controls, and cyber-security measures to safeguard investor interests
Ongoing compliance: Digital AMCs must meet all applicable NBFC Regulations, Circulars, and Directives for conventional AMCs, unless specific adjustments are explicitly stated within the new requirements.
Practical implications for stakeholders: These changes place greater emphasis on digital channels for DAMS and require thorough planning and demonstrated financial viability before licensing. For investors, this could mean enhanced digital experience, more transparent service offerings, and stricter oversight to protect assets. For DAMS providers, this framework clarifies licensing prerequisites and the expectation that digital platforms will be the primary vehicle for service delivery.
Controversy and open questions: Some observers may argue that tying DAMS licenses to exclusively digital platforms could disadvantage traditional, non-digital approaches or firms with limited digital infrastructure. Others may welcome the move as a modernization that strengthens investor protection and market integrity. How do these new rules balance innovation with consumer safeguards in Pakistan’s evolving financial services landscape? Share your thoughts in the comments.
