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

The State Bank of Pakistan has officially lifted its ban on providing services to cryptocurrency businesses, notifying all banks and financial institutions of the policy change. While the new rules allow banks to offer services to crypto companies, they explicitly prohibit these institutions from using their own funds or customer deposits to invest in, trade, or hold crypto assets. This development follows the recent passage of the Virtual Assets Act of 2026, which established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee and regulate the crypto sector. The State Bank of Pakistan has replaced its 2018 ban with new regulations that enable licensed banks and other financial institutions to open accounts for crypto firms approved by PVARA. Under the new framework, banks are permitted 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. The State Bank of Pakistan stated, "Subject to strict compliance with the outlined conditions, 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. Additionally, the Chairman of Pakistan's Virtual Assets Regulatory Authority (VARA) announced plans to accelerate crypto adoption, leverage Bitcoin mining, and launch a national stablecoin. According to the government, approximately 40 million people, or about 17% of the Pakistani population, are involved in crypto trading, making the country the third-largest crypto market by retail activity.