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

The State Bank of Pakistan has officially lifted its seven-year ban on providing banking services to cryptocurrency companies, allowing banks to open accounts for crypto firms that have been approved by the Pakistan Virtual Asset Regulatory Authority (PVARA). 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 assets. This move follows the recent passage of the Virtual Assets Act of 2026, which established PVARA as the primary regulator of the virtual asset sector in Pakistan. The State Bank of Pakistan has replaced its 2018 ban with new guidelines that enable regulated banks and financial institutions to 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. According to the State Bank of Pakistan, "Regulated entities may open bank accounts for entities licensed by PVARA as VASPs, subject to strict compliance with the conditions outlined." 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 signed a memorandum of understanding (MOU) with Binance, the world's largest cryptocurrency exchange, to explore the tokenization of up to $2 billion in bonds, treasury bills, and commodity reserves. Furthermore, the Chairman of Pakistan's Virtual Assets Regulatory Authority (VARA) announced plans to accelerate cryptocurrency adoption, leverage Bitcoin mining, and launch a national stablecoin. Approximately 40 million people, or around 17% of Pakistan's population, are involved in cryptocurrency trading, making the country the third-largest crypto market by retail activity, surpassing countries like Germany and Japan.