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A year after crypto's $19bn crash day, what Pakistan's rules say about leverage

On 10 October 2025, more than $19 billion of leveraged crypto bets were force-closed in a day, about Rs5.4 trillion. Pakistan now has written rules for exactly that business. No firm is licensed to run it yet.

Ammar Khan

Ammar Khan

5 min read
Karachi from the air at night, its streets lit in orange and white.
Photo by Tahamie Farooqui on Unsplash

Key takeaways

  • On 10 October 2025, more than $19 billion of leveraged positions were liquidated in 24 hours, according to CoinGlass data cited by CoinGecko. At that day's rate, that is about Rs5.36 trillion.
  • Binance says it paid about $283 million to users hit when three assets used as collateral lost their pegs on its platform.
  • PVARA's Derivatives Services Regulation, gazetted on 21 August 2026, covers futures, perpetuals, margin and leveraged tokens. It sets no single maximum leverage ratio.
  • No company holds a PVARA licence of any kind yet, so no one is licensed in Pakistan to offer these products.

What happened a year ago

On Friday 10 October 2025, at 14:57 UTC, US President Donald Trump posted that he would put 100% tariffs on Chinese imports. The sell-off in crypto that followed became the largest liquidation day on record.

CoinGecko's account, using CoinGlass data, puts forced closures at more than $19 billion in 24 hours, across over 1.6 million trading accounts. About $6.93 billion of that went in 40 minutes, between 20:50 and 21:30 UTC. That was the small hours of Saturday in Pakistan. Bitcoin fell 14.5%, to $104,782, in CoinGecko's figures.

A liquidation happens when a trader has borrowed to enlarge a bet and the price moves far enough against them. The exchange then closes the position and keeps the collateral. Nobody chose to sell those $19 billion. Their positions were closed for them.

At CoinGecko's rate for that day, about Rs282 to the dollar, the total comes to roughly Rs5.36 trillion.

The collateral problem

On Binance, the crash exposed a second problem. Three assets that traders had pledged as collateral, Ethena's USDe stablecoin and the staking tokens BNSOL and WBETH, traded far below their usual value on the exchange. CoinGecko records USDe falling to $0.65 there.

In its statement of 12 October 2025, Binance said the steepest prices came first, between 21:20 and 21:21 UTC, and the de-pegging after 21:36 UTC. It said it paid about $283 million in two batches. The money went to futures, margin and loan users liquidated while holding those assets as collateral, and to some users hit by delayed transfers and stale limit orders.

We are not judging how Binance handled that night. The point for Pakistani readers is narrower. Last October showed that the price an exchange uses to value collateral can matter as much as the market itself.

What PVARA's rules require

Pakistan's Activity Specific Regulations, notified as S.R.O. 1420(I)/2026 on 21 August 2026, include a Derivatives Services Regulation. It defines derivatives to cover futures, perpetual contracts, options, swaps and contracts for difference. It covers leveraged tokens and margin too. In outline:

  • A separate licence. Under regulation 19(1) of the Exchange Services Regulations, an exchange may not offer margin, futures, perpetuals or leveraged tokens unless that permission is expressly stated in its licence. Under regulation 3 of the Derivatives Services Regulation, an applicant must generally already hold an exchange or broker-dealer licence, unless it meets other requirements PVARA sets, for example for a service limited to professional or institutional clients. Schedule I sets its minimum capital at Rs500 million.
  • Retail needs explicit approval. Regulation 4(1) bars a firm from offering derivatives unless PVARA has given "explicit approval" to deal with institutional, professional or retail clients. Retail trading is not banned. It has to be approved.
  • A test, then a warning. Before a client trades, regulation 8 requires the firm to assess their knowledge of leverage, margining and "liquidation risk". If a product is not appropriate for a retail client, the firm must warn them clearly and record the warning. The rules do not require it to refuse the trade, though it may.
  • No fixed leverage cap. There is no set maximum, such as 10 times the deposit. Regulation 13 makes each firm set leverage limits for its own risk profile, and regulation 11(4) says it "shall not rely on a fixed leverage cap alone" in place of a prudent margin framework.
  • Collateral and prices. Regulation 12(3) says collateral must be "sufficiently liquid, readily realizable, capable of prudent valuation and legally available for enforcement". Under regulation 14(2)(c), pricing methods must deal with "stale prices, outliers and anomalous prints".
  • Liquidations in the open. A firm may not rely on "opaque or unlimited discretionary liquidation powers" that go beyond its client agreement (regulation 15(4)). If it runs an insurance or guarantee fund, it must not present it as "eliminating Client risk" (regulation 15(5)). "Abusive liquidations" and manipulation of mark prices are prohibited (regulation 17(3)).
  • The regulator's brake. Under regulation 20(3) of the Exchange Services Regulations, PVARA can order a firm to suspend margin trading, close client positions or raise margin requirements.

These are requirements on paper. How PVARA supervises them will only be known once a firm applies for this category and is licensed.

Who can offer this in Pakistan today

No one, legally. As our licence tracker records, no company holds a full PVARA licence. Binance and HTX hold no-objection certificates from December 2025. An NOC is not a licence and does not authorise any virtual asset service. Firms that were operating before the Act must apply for licences by about 21 November 2026.

Pakistanis can still reach futures and perpetuals on offshore platforms. Those platforms set their own leverage and liquidation rules, and no Pakistani regulator supervises them.

What this means for Pakistani users

  • Leverage can wipe you out in minutes. Last October, most of the forced closures happened in 40 minutes, overnight in Pakistan. A position that is fine at midnight can be gone by 2am.
  • Check what your collateral is. If you pledge a stablecoin or staking token, the exchange's own price for it decides when you are liquidated. That price can differ from the wider market.
  • Read the liquidation terms. The new rules make licensed firms spell out margin calls, liquidation triggers and insurance funds. Until a firm is licensed, those terms are whatever its own user agreement says.
  • No local protection yet. Until PVARA licenses a derivatives provider, no Pakistani regulator can handle your complaint about a liquidation.

CryptoPakistan has no affiliate or referral relationship with Binance or any exchange named here.

What we're watching

  • Which firms apply for the Derivatives Services category before the 21 November deadline, and whether any seek retail approval.
  • Whether PVARA issues the "detailed rules" on margin and liquidations that regulation 19(4) allows it to set later.
  • The public register of licensees, which still does not exist. Our tracker will log it when it does.

Sources

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