Pakistan Reverses Seven-Year Crypto Ban, Permitting Banks to Serve Crypto Firms

The State Bank of Pakistan has officially lifted its seven-year ban on providing services to cryptocurrency firms, notifying all banks and financial institutions of the change. However, banks are still barred from using their own funds or customer deposits to invest in, trade, or hold crypto assets. This move follows the recent passage of the 2026 Virtual Assets Act, which established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee the sector. The new rules allow regulated banks to open accounts for crypto firms licensed by PVARA, as well as those seeking approval, provided they comply with 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 supervision. This development 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 around 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.