Pakistan Reverses Seven-Year Cryptocurrency Ban, Enables Banks to Support Crypto Firms

The State Bank of Pakistan has officially lifted its ban on providing services to cryptocurrency companies, 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 comes after the enactment of the 2026 Virtual Assets Act, which established the Pakistan Virtual Asset Regulatory Authority to oversee the sector. The central bank has replaced its 2018 ban with new rules permitting regulated banks to open accounts for cryptocurrency firms licensed under the new act. Banks can now provide services to licensed virtual asset service providers and those seeking approval, provided they comply with strict anti-money laundering, know-your-customer, and counter-terrorism financing regulations. The State Bank of Pakistan has outlined detailed conditions for onboarding cryptocurrency firms, including license verification, enhanced due diligence, and ongoing transaction supervision. Recently, the Pakistani government signed an agreement with Binance to explore tokenizing bonds and commodity reserves, and the country's regulatory authority has announced plans to accelerate cryptocurrency adoption and launch a national stablecoin. With approximately 40 million people, or 17% of the population, involved in cryptocurrency trading, Pakistan is the third-largest retail crypto market, surpassing countries like Germany and Japan.