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

The State Bank of Pakistan has officially lifted its ban on banks providing services to cryptocurrency companies, issuing a notice to all financial institutions in the country. 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 move comes after the implementation of the 2026 Virtual Assets Act, which established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee the sector. The central bank has replaced its 2018 ban with new rules, enabling regulated banks to open accounts for crypto firms licensed under PVARA. Under these new regulations, banks can 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. The State Bank of Pakistan outlined the conditions for onboarding crypto firms, including mandatory license verification, enhanced due diligence, and ongoing transaction supervision. This development follows a recent partnership between the Pakistani government and Binance to explore tokenization opportunities. Additionally, the Chairman of PVARA has announced plans to accelerate crypto adoption and launch a national stablecoin, with approximately 40 million people in Pakistan already involved in crypto trading.