Pakistan Reverses Seven-Year Crypto Ban, Enables Banks to Support Digital Asset Providers

The State Bank of Pakistan has officially lifted its seven-year ban on providing banking services to cryptocurrency businesses, allowing regulated financial institutions to open accounts for licensed virtual asset service providers. However, these institutions are strictly barred from using their own funds or customer deposits to invest in, trade, or hold cryptocurrencies. 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 stringent anti-money laundering, know-your-customer, and counter-terrorism financing regulations. The central bank has outlined detailed conditions for onboarding cryptocurrency firms, including mandatory license verification, enhanced due diligence, and ongoing transaction supervision. This development comes after the Pakistani government signed a memorandum of understanding with Binance to explore tokenizing bonds, treasury bills, and commodity reserves, and announced plans to accelerate cryptocurrency adoption, leverage Bitcoin mining, and launch a national stablecoin. With approximately 40 million people, or 17% of the population, involved in cryptocurrency trading, Pakistan is the third-largest retail crypto market, surpassing countries like Germany and Japan.