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

Pakistan's central banking authority has officially lifted its seven-year prohibition on banks providing services to cryptocurrency businesses. However, the new regulations stipulate that banks are not allowed to invest in, trade, or hold digital assets using their own funds or customer deposits. This move follows the recent passage of the 2026 Virtual Assets Act, which established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee and regulate the industry. The State Bank of Pakistan has replaced its 2018 ban with new guidelines, permitting regulated banks to open accounts for cryptocurrency firms licensed by PVARA. Under these new rules, banks can provide services to licensed virtual asset service providers (VASPs) and those seeking approval, 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 cryptocurrency companies, including mandatory license verification, enhanced due diligence, and ongoing transaction monitoring. Recently, the Pakistani government signed a memorandum of understanding with Binance, allowing the company to explore tokenizing up to $2 billion in bonds, treasury bills, and commodity reserves. Furthermore, the Chairman of PVARA announced plans to accelerate cryptocurrency adoption, leverage bitcoin mining, and launch a national stablecoin. With approximately 40 million people, or 17% of the population, involved in cryptocurrency trading, Pakistan is the third-largest retail crypto market, surpassing countries like Germany and Japan.