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

The State Bank of Pakistan has officially lifted its ban on banks providing services to cryptocurrency firms, allowing them to open accounts for licensed virtual asset service providers. However, financial institutions are still barred from investing in or trading cryptocurrencies using their own funds or customer deposits. This move follows the introduction of the 2026 Virtual Assets Act, which established the Pakistan Virtual Asset Regulatory Authority to oversee the sector. Under the new framework, banks can provide services to licensed crypto firms and those seeking approval, provided they comply with strict anti-money laundering and know-your-customer regulations. The central bank has outlined detailed conditions for onboarding crypto firms, including mandatory license verification and enhanced due diligence. This development comes after the Pakistani government signed an agreement with Binance to explore tokenization and announced plans to boost crypto adoption, including Bitcoin mining and a national stablecoin. With around 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.