Pakistan Reverses Seven-Year Crypto Ban, Permitting Banks to Support Virtual Asset Providers

The State Bank of Pakistan has officially lifted its ban on providing services to cryptocurrency providers, allowing banks and financial institutions to open accounts for crypto businesses 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 cryptocurrencies. This development follows the recent passage of the Virtual Assets Act of 2026, which established PVARA as the regulatory body overseeing the virtual assets 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 virtual asset service providers (VASPs) licensed under PVARA, as well as 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, 'Subject to strict compliance with the conditions outlined, SBP Regulated Entities (REs) may open bank accounts for entities duly licensed by PVARA as Virtual Asset Service Providers (VASPs).' 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 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), Bilal Bin Saqib, 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, surpassing countries like Germany and Japan.