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

The State Bank of Pakistan has officially lifted its seven-year ban on providing services to cryptocurrency businesses, notifying all banks and financial institutions that they are now allowed to offer services to these firms. However, banks are still restricted from using their own funds or customer deposits to invest, trade, or hold crypto assets. This move comes after the recent passage of the 2026 Virtual Assets Act, which established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee and regulate the sector. The new regulations permit licensed banks and financial institutions to open accounts for crypto firms approved by PVARA, provided they adhere to strict anti-money laundering, know-your-customer, and counter-terrorism financing regulations. Banks can now provide services to licensed virtual asset service providers (VASPs) and those seeking approval, under the condition that they comply with the outlined requirements. The central bank has also outlined detailed conditions for onboarding crypto firms, including mandatory license verification, enhanced due diligence, and ongoing transaction supervision. This development follows a recent partnership between the Pakistani government and Binance to explore tokenization opportunities, as well as plans to accelerate crypto adoption and launch a national stablecoin. With approximately 40 million people, or 17% of the population, involved in crypto trading, Pakistan is poised to become a significant player in the global crypto market.