SECP Issues New Rules for Digital Asset Management Services (DAMS)
Pakistan has taken a major step toward strengthening its digital financial ecosystem with the introduction of new rules for Digital Asset Management Services (DAMS). The Securities and Exchange Commission of Pakistan (SECP) has officially issued updated requirements for Digital Asset Management Companies—widely known as Digital AMCs—through S.R.O. 1438(I)/2025, amending the long-standing Non-Banking Finance Companies and Notified Entities Regulations, 2008.
This regulatory update aims to modernize Pakistan’s asset management sector by enabling safe, transparent, and efficient delivery of financial services through digital platforms. Searches like “SECP DAMS rules,” “Digital AMC Pakistan,” “SECP SRO 1438,” “digital asset management regulations Pakistan,” and “NBFC digital rules 2025” are trending as the financial community responds to the reforms.
This comprehensive article explains SECP’s new DAMS framework, eligibility requirements, licensing procedures, digital platform standards, and what these changes mean for Pakistan’s financial markets.
What Are Digital Asset Management Services (DAMS)?
Digital Asset Management Services refer to technology-driven financial advisory and investment management services delivered entirely through digital channels.
These services include:
- Investment management
- Fund distribution
- Digital onboarding
- Risk assessment
- Portfolio tracking
- Redemption and transaction processing
DAMS are provided by Digital AMCs through legally approved digital platforms such as mobile apps and web portals.
Why Did SECP Introduce New DAMS Rules?
SECP introduced these regulations to:
- Encourage digital transformation in Pakistan’s financial sector
- Improve investor access to regulated digital financial services
- Ensure transparency, cybersecurity, and operational governance
- Protect investors from unregulated digital investment schemes
- Enable NBFCs and AMCs to compete with global fintech trends
The goal is to create a fully regulated digital investment environment that supports the growing demand for digital financial solutions in Pakistan.
Definition of “Digital Platform” Under the New Rules
SECP’s definition of a Digital Platform is broad and covers multiple technologies. A Digital Platform is defined as:
“A tool, application, software, or solution using digital/IT as the primary interface between the Digital AMC, investors/unitholders, and other involved parties.”
This includes:
- Mobile applications
- Web-based investment portals
- Internet banking channels
- Digital distribution platforms
- Aggregator platforms
- AI-based digital advisory tools
- Backend support services enabling digital investment
The definition ensures that any technology used to offer DAMS falls under SECP’s regulatory umbrella.
Who Must Follow These New Requirements?
SECP clarified that the new rules apply to:
1. Digital Asset Management Companies (Digital AMCs)
Companies that operate exclusively through digital platforms.
2. Traditional Asset Management Companies Using Digital Platforms
If a conventional AMC offers digital onboarding or investment services, it must comply with the new DAMS framework.
3. Fund Management NBFCs Seeking DAMS License
NBFCs offering fund management services must declare the intention to obtain a DAMS license in their official documentation.
4. All digital platforms owned or managed by Digital AMCs
This includes platforms for onboarding, investment, portfolio tracking, and fund distribution.
The goal is to create uniformity and compliance across Pakistan’s digital financial landscape.
Licensing Requirements for Digital AMCs
One of the most significant parts of the new rules concerns licensing.
To offer DAMS, a Fund Management NBFC must:
1. Mention DAMS Intention in Form-II (NBFC Rules)
SECP requires NBFCs to explicitly declare their intention to obtain a DAMS license during the licensing process.
2. Comply With Rule 4 and Rule 5 of NBFC Rules
Fund Management NBFCs must meet all requirements of Rule 4 and Rule 5 to qualify for an AMC license.
3. Submit a Detailed Business Plan
The NBFC must submit:
- A viable five-year business plan
- Financial projections for at least 5 years
- Clear underlying assumptions
- Operational processes
- Revenue model
- Technology infrastructure plan
- Investor servicing strategy
SECP requires these projections to ensure the company is financially and operationally capable of running digital services.
4. Provide Operational Readiness Documentation
Digital AMCs must show:
- Their tech systems are secure
- Their digital channels are stable
- They have backup and recovery systems
- They can support onboarding, KYC, and transactions
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What Happens After SECP Reviews the Application?
SECP may grant a conditional AMS license, but with a restriction:
Such an AMC will be allowed to provide DAMS only through digital platforms.
This ensures that the entity remains fully aligned with digital investment service standards.
Requirements for Operating a Digital AMC
SECP states that Digital AMCs must fulfill all conventional AMC rules, unless specifically modified by DAMS regulations.
This means Digital AMCs must comply with:
- NBFC Regulations 2008
- NBFC Rules
- SECP circulars
- SECP directives
- Code of Corporate Governance
In addition, they must meet enhanced digital requirements.
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Key Digital Compliance Requirements for Digital AMCs
Digital AMCs must follow stringent rules to protect investors, promote transparency, and ensure stable digital operations.
1. Cybersecurity and Data Protection
Digital AMCs must implement:
- Strong IT security measures
- Data encryption
- Secure login systems
- Regular vulnerability assessments
- Incident reporting mechanisms
2. Transparent Digital Onboarding
The investor must know:
- Risks associated with investment
- Fees/charges
- Redemption guidelines
- Fund details
3. Automated Compliance Systems
These include:
- E-KYC and CDD verification
- AML/CFT checks
- Digital signatures
- Automated reporting
4. Digital Customer Support
Digital AMCs must ensure:
- 24/7 customer support options
- Chatbots or live assistance
- Ticketing systems
5. Technology Audits
SECP may require third-party audits of:
- Cybersecurity
- Digital operations
- Financial systems
Impact on Pakistan’s Digital Financial Sector
This is a major step toward building a modern digital investment landscape in Pakistan.
1. Boost to Fintech Innovation
Fintech companies can now partner with AMCs to deliver regulated investment services.
2. Increased Investor Trust
With SECP’s oversight, investors can access digital investment options with confidence.
3. Greater Financial Inclusion
Digital AMCs make investing accessible to:
- Young professionals
- Small investors
- Remote-area users
4. Global Standardization
Pakistan’s framework aligns with digital investment standards in:
- Malaysia
- UAE
- Singapore
- UK
5. Growth in Mutual Funds and ETFs
Digital distribution will increase participation in:
- Mutual funds
- Shariah funds
- Fixed-income portfolios
- Digital ETFs
Challenges Pakistan Must Address
While the new rules offer many benefits, certain challenges need attention:
1. Digital Literacy Gap
Many investors still rely on physical channels.
2. Cybersecurity Concerns
Digital platforms are highly vulnerable to cyber threats.
3. Slow Internet Connectivity
Digital platforms require strong broadband access.
4. Resistance From Traditional Institutions
Conventional AMCs may struggle to adapt to strict digital standards.
5. Regulatory Evolution
Rules must continue evolving as technology advances.
Conclusion About SECP DAMS Regulations:
SECP’s newly issued rules for Digital Asset Management Services (DAMS) mark a transformative moment for Pakistan’s digital finance sector. The amendments under S.R.O. 1438(I)/2025 ensure that Digital AMCs and NBFCs follow strict compliance, cybersecurity, operational, and licensing requirements.
These rules aim to expand financial inclusion, enhance investor protection, and bring the asset management industry in line with global standards. As Pakistan shifts toward a more digital future, the DAMS framework will play a key role in shaping the next era of investment services in the country.
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Frequently Asked Questions (FAQ)
1. What are Digital Asset Management Services (DAMS)?
Digital Asset Management Services (DAMS) are technology-based investment and asset management services offered through digital platforms such as mobile apps, websites, and online portals. These services include onboarding, risk assessment, fund investment, and portfolio management.
2. Why did SECP introduce new DAMS rules?
SECP introduced DAMS regulations to modernize Pakistan’s financial sector, ensure investor protection, promote digital transparency, encourage fintech innovation, and regulate digital investment platforms under a proper legal framework.
3. What is considered a “Digital Platform” under the new rules?
According to SECP, a digital platform includes any tool, software, application, or solution—such as mobile apps, web portals, or aggregator platforms—used as the primary interface between Digital AMCs, investors, and other parties involved in DAMS.
4. Who must comply with the new DAMS requirements?
The requirements apply to Digital AMCs, traditional AMCs offering digital services, Fund Management NBFCs seeking a DAMS license, and all digital platforms managed or owned by Digital AMCs.
5. What are the licensing requirements for Fund Management NBFCs?
An NBFC must declare its intention to obtain a DAMS license in Form-II of the NBFC Rules, comply with Rule 4 and Rule 5 of the NBFC Rules, and submit a five-year business plan with financial projections and operational details.
