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

The State Bank of Pakistan has officially lifted its seven-year ban on providing services to cryptocurrency companies, allowing banks to open accounts for crypto firms that have been approved by the Pakistan Virtual Asset Regulatory Authority (PVARA). However, financial institutions are still not permitted to invest in, trade, or hold cryptocurrencies using their own funds or customer deposits, in accordance with the new regulations. This development follows the enactment of the 2026 Virtual Assets Act, which established PVARA to oversee and regulate the virtual asset sector in Pakistan. The State Bank of Pakistan has replaced its 2018 ban with new guidelines that enable regulated banks and financial institutions to provide services to virtual asset service providers (VASPs) that are licensed under the new crypto act, as well as to those seeking approval, provided they adhere to strict anti-money laundering (AML), know-your-customer (KYC), and counter-terrorism financing regulations. According to the State Bank of Pakistan, "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 has also outlined detailed conditions for onboarding crypto firms, including mandatory license verification, enhanced due diligence, and ongoing supervision of all transactions. In a recent development, the Pakistani government and Binance signed a memorandum of understanding (MOU) to explore the tokenization of up to $2 billion in bonds, treasury bills, and commodity reserves in Pakistan. Additionally, the Chairman of Pakistan's Virtual Assets Regulatory Authority (VARA), Bilal Bin Saqib, announced plans to accelerate crypto adoption, leverage Bitcoin mining, and launch a national stablecoin in a video interview with CoinDesk. Approximately 40 million people, or 17% of Pakistan's population, are involved in cryptocurrency trading, according to the government, making the country the third-largest crypto market by retail activity, surpassing countries like Germany and Japan.