The State Bank of Pakistan has officially lifted its seven-year ban on providing services to cryptocurrency firms, issuing a notice to all banks and 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 crypto assets.
This development follows the recent passage of the 2026 Virtual Assets Act, which established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee and regulate the sector. The central bank has replaced its 2018 ban with new rules, enabling regulated banks and financial institutions to open accounts for crypto companies approved by PVARA. Under the new framework, 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 has outlined specific conditions for onboarding crypto firms, including mandatory license verification, enhanced due diligence, and ongoing transaction supervision. In a recent development, the Pakistani government and Binance signed a memorandum of understanding (MOU) to explore tokenizing up to $2 billion in bonds, treasury bills, and commodity reserves.
Additionally, the Chairman of PVARA has 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.