Pakistan Reverses Seven-Year Crypto Ban, Permitting Banks to Support Crypto Providers

The State Bank of Pakistan has officially lifted its seven-year ban on providing banking services to cryptocurrency firms, notifying all financial institutions that they are now allowed to work with crypto companies. However, banks are still barred from using their own funds or customer deposits to invest in, trade, or hold digital assets. This move follows the recent introduction of the Virtual Assets Act of 2026, which established the Pakistan Virtual Asset Regulatory Authority to oversee and regulate the industry. Under the new framework, banks can open accounts for crypto businesses that have been licensed by the regulatory authority, provided they adhere to strict anti-money laundering, know-your-customer, and counter-terrorism financing regulations. The central bank has outlined detailed conditions for onboarding crypto 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 up to $2 billion in bonds and commodities, and announced plans to accelerate crypto adoption and launch a national stablecoin. With approximately 40 million people, or 17% of the population, involved in crypto trading, Pakistan is the third-largest retail crypto market, surpassing countries like Germany and Japan.