Pakistan Reverses Seven-Year Crypto Ban, Permitting Banks to Support Digital Asset Providers

The central bank of Pakistan has officially lifted its seven-year prohibition on providing services to cryptocurrency firms, allowing banks and financial institutions to facilitate transactions for these companies. However, financial institutions are still barred from using their own funds or customer deposits to invest in, trade, or hold digital assets. This move follows the recent implementation of the Virtual Assets Act of 2026, which established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee and regulate 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 stringent anti-money laundering, know-your-customer, and counter-terrorism financing regulations. The State Bank of Pakistan has outlined specific conditions for onboarding cryptocurrency companies, including mandatory license verification, enhanced due diligence, and ongoing supervision of transactions. This development comes after the Pakistani government signed a memorandum of understanding with Binance to explore tokenization opportunities 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 cryptocurrency trading, Pakistan is the third-largest retail crypto market, surpassing countries like Germany and Japan.