Pakistan Reverses Seven-Year Crypto Ban, Enables Banks to Support Digital Asset Providers

The State Bank of Pakistan has officially lifted its ban on providing services to cryptocurrency companies, allowing banks to open accounts for licensed virtual asset service providers. However, banks are still restricted from using their own funds or customer deposits to invest in, trade, or hold cryptocurrencies. This move follows the introduction of the 2026 Virtual Assets Act, which establishes the Pakistan Virtual Asset Regulatory Authority to oversee the sector. Under the new framework, banks can provide services to licensed virtual asset service providers and those seeking approval, 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 supervision. This development comes after the Pakistani government signed a memorandum of understanding with Binance to explore tokenization opportunities and announced plans to accelerate crypto adoption, leverage Bitcoin mining, and launch a national stablecoin. With approximately 40 million people, or 17% of the population, involved in crypto trading, Pakistan is the third-largest crypto market by retail activity.