Pakistan Reverses Seven-Year Crypto Ban, Enables Banking Services for Crypto Providers

The State Bank of Pakistan has officially lifted its seven-year ban on providing banking services to cryptocurrency firms, allowing banks to open accounts for licensed crypto businesses. However, financial institutions are still barred from using their own funds or customer deposits to invest in, trade, or hold digital assets. This development follows the introduction of the 2026 Virtual Assets Act, which established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee the sector. Under the new framework, banks can provide services to licensed virtual asset service providers (VASPs) and those seeking approval, provided they adhere to strict anti-money laundering, know-your-customer, and counter-terrorism financing regulations. The central bank has outlined detailed conditions for onboarding crypto firms, including mandatory license verification, enhanced due diligence, and ongoing transaction monitoring. This move comes after the Pakistani government signed an agreement with Binance to explore tokenizing up to $2 billion in bonds and commodity reserves, and announced plans to accelerate crypto adoption, leverage Bitcoin mining, and launch a national stablecoin. With approximately 40 million people, or 17% of the population, involved in crypto trading, Pakistan is the third-largest crypto market by retail activity, surpassing countries like Germany and Japan.