Pakistan Removes Seven-Year Crypto Ban, Enabling Banks to Cater to Crypto Providers

The State Bank of Pakistan has announced the lifting of a seven-year ban on providing services to cryptocurrency businesses, allowing banks to offer their services to licensed crypto firms. However, the new regulations stipulate that banks are not permitted to use their own funds or customer deposits to invest in, trade, or hold crypto assets. This move comes after the introduction of the Virtual Assets Act of 2026, which established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee the sector. The central bank has replaced its 2018 ban with new rules that enable regulated banks to open accounts for crypto companies approved by PVARA. Under these new regulations, banks can provide services to licensed virtual asset service providers (VASPs) as well as those awaiting approval, provided they adhere to strict anti-money laundering (AML), know-your-customer (KYC), and counter-terrorism financing regulations. The State Bank of Pakistan has stated that, subject to strict compliance, its regulated entities may open bank accounts for PVARA-licensed VASPs. The central bank has also outlined detailed conditions for onboarding crypto firms, including mandatory license verification, enhanced due diligence, and ongoing supervision of their 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) has announced plans to accelerate crypto adoption, leverage Bitcoin mining, and launch a national stablecoin. According to the government, approximately 40 million Pakistanis, or around 17% of the population, are involved in crypto trading, making the country the third-largest crypto market by retail activity.