Pakistan Removes Seven-Year Crypto Ban, Permitting Banks to Offer Services to Crypto Providers

The State Bank of Pakistan has officially lifted its ban on providing banking services to cryptocurrency companies, issuing a notice to all financial institutions in the country. However, banks are still restricted from using their own funds or customer deposits to invest in, trade, or hold cryptocurrency. This development follows the introduction of the 2026 Virtual Assets Act, which established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee and regulate the sector. The new rules allow licensed banks and financial institutions to open accounts for cryptocurrency firms approved by PVARA, provided they adhere to strict anti-money laundering, know-your-customer, and counter-terrorism financing regulations. As part of the new framework, banks can offer services to virtual asset service providers (VASPs) and those seeking approval, subject to rigorous verification and ongoing supervision. The central bank has outlined detailed conditions for onboarding cryptocurrency firms, including mandatory license verification and enhanced due diligence. Recently, the Pakistani government signed an agreement with Binance to explore tokenization opportunities, and the country's regulatory authority has announced plans to promote cryptocurrency adoption and launch a national stablecoin. With approximately 40 million people, or 17% of the population, involved in cryptocurrency trading, Pakistan is the third-largest retail crypto market, surpassing countries like Germany and Japan.