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

The State Bank of Pakistan has officially lifted its ban on providing banking services to cryptocurrency businesses, allowing financial institutions to open accounts for licensed virtual asset service providers. However, banks are still restricted from using their own funds or customer deposits to invest in, trade, or hold cryptocurrencies. This move follows the introduction of the 2026 Virtual Assets Act, which established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee the industry. Under the new regulations, banks can provide services to licensed virtual asset service providers and those seeking approval, provided they comply with strict anti-money laundering, know-your-customer, and counter-terrorism financing rules. The central bank has outlined detailed conditions for onboarding cryptocurrency firms, including license verification, enhanced due diligence, and ongoing transaction monitoring. This development comes after the Pakistani government signed an agreement with Binance to explore tokenizing bonds and commodity reserves, and announced plans to accelerate 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.