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

The central bank of Pakistan has officially lifted its seven-year ban on providing services to cryptocurrency businesses, notifying all banks and financial institutions of the change. However, the new regulations stipulate that banks are not allowed to use their own funds or customer deposits to invest in, trade, or hold cryptocurrency. This development follows the recent passage of the 2026 Virtual Assets Act, which established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee and regulate the sector. The State Bank of Pakistan has replaced its 2018 ban with new rules allowing regulated banks and financial institutions to open accounts for cryptocurrency firms approved by PVARA. Under these new regulations, banks can provide services to licensed virtual asset service providers (VASPs) and those seeking approval, provided they adhere to strict anti-money laundering (AML), know-your-customer (KYC), and counter-terrorism financing regulations. The central bank has outlined detailed conditions for onboarding cryptocurrency firms, including mandatory license verification, enhanced due diligence, and ongoing transaction supervision. Recently, the Pakistani government and Binance signed a memorandum of understanding (MOU) to explore tokenizing up to $2 billion in bonds, treasury bills, and commodity reserves. Moreover, the Chairman of PVARA announced plans to accelerate cryptocurrency adoption, leverage Bitcoin mining, and launch a national stablecoin, with approximately 40 million Pakistanis, or 17% of the population, already involved in cryptocurrency trading, making the country the third-largest crypto market by retail activity.