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 businesses, allowing financial institutions to open accounts for licensed crypto firms. However, banks are still barred from using their own funds or customer deposits to invest in, trade, or hold digital assets. This move follows the recent passage of the Virtual Assets Act of 2026, which established 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 conditions for onboarding crypto firms, including license verification, enhanced due diligence, and ongoing transaction supervision. This development comes after the Pakistani government signed an agreement with Binance to explore tokenizing up to $2 billion in bonds and commodities, and announced plans to accelerate crypto adoption and launch a national stablecoin. With approximately 40 million people, or 17% of the population, involved in crypto trading, Pakistan is the third-largest retail crypto market, surpassing countries like Germany and Japan.