Pakistan Repeals Seven-Year Crypto Ban, Enables Banks to Cater to Crypto Firms

The State Bank of Pakistan has informed all banks and financial institutions that the longstanding ban on providing services to cryptocurrency companies has been lifted. However, under the newly introduced regulations, banks are restricted from using their own funds or customer deposits to invest in, trade, or hold cryptocurrency assets. This move by the State Bank of Pakistan follows the recent passage of the 2026 Virtual Assets Act, which establishes the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee the licensing, regulation, and supervision of the sector. The central bank has replaced its 2018 ban on cryptocurrency with new guidelines that allow regulated banks and other financial institutions to open accounts for cryptocurrency firms that have been approved by PVARA. According to the new framework, banks can provide services to virtual asset service providers (VASPs) that are licensed under the new cryptocurrency act, as well as to those seeking approval, provided they adhere strictly to anti-money laundering (AML), know-your-customer (KYC), and counter-terrorism financing regulations. The State Bank of Pakistan stated, "Subject to strict compliance with the conditions outlined, SBP Regulated Entities (REs) may open bank accounts for entities duly licensed by PVARA as Virtual Asset Service Providers (VASPs)." The central bank's regulations also outline detailed conditions for onboarding cryptocurrency firms, including mandatory verification of licenses, enhanced due diligence, and ongoing supervision of all their transactions. In December, the Pakistani government and Binance signed a memorandum of understanding (MOU) that enables the world's largest cryptocurrency exchange by trade volume to explore tokenizing up to $2 billion in bonds, treasury bills, and commodity reserves in Pakistan. During the same month, the Chairman of Pakistan's Virtual Assets Regulatory Authority (VARA), Bilal Bin Saqib, announced in a video interview with CoinDesk that his country plans to accelerate cryptocurrency adoption, leverage Bitcoin mining, and launch a national stablecoin. Approximately 40 million people, or about 17% of Pakistan's population, are involved in cryptocurrency trading, according to the government's statement in February. Pakistan is the third-largest cryptocurrency market by retail activity, surpassing countries like Germany and Japan.