Pakistan Revokes Seven-Year Ban, Enables Banks to Offer Services to Crypto Providers

The State Bank of Pakistan has notified all financial institutions in the country that the long-standing ban on providing services to cryptocurrency firms has been officially lifted. However, according to the newly introduced regulations, banks are strictly prohibited from using their own funds or customer deposits to invest in, trade, or hold cryptocurrencies. This development follows the recent passage of the Virtual Assets Act of 2026, 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 guidelines that allow regulated banks and other financial institutions to open accounts for cryptocurrency companies approved by PVARA. Under the new framework, banks are authorized to provide services to virtual asset service providers (VASPs) licensed under the new cryptocurrency act, as well as to those seeking approval, provided they adhere to stringent anti-money laundering (AML), know-your-customer (KYC), and counter-terrorism financing regulations. The State Bank of Pakistan has outlined detailed conditions for onboarding cryptocurrency firms, including mandatory license verification, enhanced due diligence, and ongoing supervision of all transactions. In a recent development, the Pakistani government and Binance signed a memorandum of understanding (MOU) to explore the tokenization of up to $2 billion in bonds, treasury bills, and commodity reserves. Furthermore, the Chairman of PVARA announced plans to accelerate cryptocurrency adoption, leverage Bitcoin mining, and launch a national stablecoin. Approximately 40 million people, or around 17% of the Pakistani population, are involved in cryptocurrency trading, making the country the third-largest crypto market by retail activity.