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

In a significant move, Pakistan's central bank has lifted its ban on banks providing services to cryptocurrency firms, notifying all financial institutions in the country of the change. However, banks are still barred from using their own funds or customer deposits to invest in, trade, or hold cryptocurrencies. This development follows 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 rules replace the 2018 ban on crypto and allow regulated banks to open accounts for cryptocurrency companies licensed by PVARA, provided they adhere to strict anti-money laundering, know-your-customer, and counter-terrorism financing regulations. The State Bank of Pakistan has outlined detailed conditions for onboarding cryptocurrency firms, including mandatory license verification, enhanced due diligence, and ongoing transaction monitoring. This move comes after the Pakistani government and Binance signed an agreement to explore tokenizing up to $2 billion in bonds, treasury bills, and commodity reserves. Pakistan's Virtual Assets Regulatory Authority has also announced plans to accelerate cryptocurrency adoption and launch a national stablecoin, with approximately 40 million people, or 17% of the population, already involved in cryptocurrency trading, making Pakistan the third-largest retail crypto market, surpassing countries like Germany and Japan.