Pakistan Reverses Seven-Year Crypto Ban, Permitting Banks to Serve Crypto Firms

The State Bank of Pakistan has officially lifted its ban on crypto services, notifying all banks and financial institutions that they are allowed to provide services to cryptocurrency firms. However, they are still barred from using their own funds or customer deposits to invest, trade, or hold cryptocurrency assets. This move follows the recent enactment of the Virtual Assets Act of 2026, which established the Pakistan Virtual Asset Regulatory Authority to oversee the sector. The new rules permit licensed banks and financial institutions to open accounts for crypto firms approved 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 mandatory license verification, enhanced due diligence, and ongoing transaction supervision. This development comes after the Pakistani government signed a memorandum of understanding with Binance to explore tokenization opportunities 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 now the third-largest crypto market by retail activity.