Pakistan Removes Seven-Year Ban, Enables Banks to Support Crypto Businesses

The State Bank of Pakistan has officially lifted its ban on providing services to cryptocurrency firms, notifying all banks and financial institutions of the change. However, the new regulations stipulate that banks are not permitted to use their own funds or customer deposits to invest in, trade, or hold cryptocurrency assets. This development follows the recent passage of the Virtual Assets Act of 2026, which established the Pakistan Virtual Asset Regulatory Authority to oversee the sector. The new rules permit regulated banks to open accounts for crypto businesses that have been approved or are seeking approval under the 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 monitoring. This move is part of Pakistan's broader efforts to embrace cryptocurrency, with the government recently signing an agreement with Binance to explore tokenization opportunities and announcing plans to accelerate crypto adoption and launch a national stablecoin. Approximately 40 million people in Pakistan, or around 17% of the population, are involved in crypto trading, making it the third-largest retail crypto market globally.