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

The central bank of Pakistan has officially lifted its seven-year ban on providing services to cryptocurrency firms, allowing banks and financial institutions to open accounts for approved crypto businesses. However, these institutions are still barred from using their own funds or customer deposits to invest in, trade, or hold digital assets. This change follows the introduction of the 2026 Virtual Assets Act, which established the Pakistan Virtual Asset Regulatory Authority to oversee the sector. Under the new framework, regulated banks can provide services to licensed virtual asset service providers, as well as those awaiting approval, provided they adhere to strict anti-money laundering, know-your-customer, and counter-terrorism financing regulations. The State Bank of Pakistan has outlined specific conditions for onboarding crypto firms, including license verification, enhanced due diligence, and ongoing transaction supervision. Recently, the Pakistani government signed an agreement with Binance to explore tokenizing up to $2 billion in bonds and commodity reserves. The country aims to accelerate crypto adoption, leverage Bitcoin mining, and introduce a national stablecoin, with approximately 40 million people, or 17% of the population, already involved in crypto trading, making Pakistan the third-largest retail crypto market.