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

The State Bank of Pakistan has officially lifted its seven-year prohibition on banks providing services to cryptocurrency businesses. However, the new regulations stipulate that banks are still not allowed to invest in, trade, or hold cryptocurrency using either their own funds or customer deposits. This development comes after the implementation of the Virtual Assets Act of 2026, which established the Pakistan Virtual Asset Regulatory Authority to oversee the sector. The central bank has replaced its 2018 ban with new guidelines that enable regulated financial institutions to open accounts for crypto firms approved by the regulatory authority. Under these guidelines, banks can offer services to licensed virtual asset service providers, as well as those awaiting approval, provided they adhere to strict anti-money laundering, know-your-customer, and counter-terrorism financing regulations. The State Bank of Pakistan has outlined specific conditions for onboarding crypto companies, including mandatory license verification, enhanced due diligence, and ongoing transaction monitoring. Recently, the Pakistani government signed an agreement with Binance to explore tokenizing bonds and commodity reserves worth up to $2 billion. Furthermore, the chairman of Pakistan's Virtual Asset Regulatory Authority has announced plans to accelerate crypto adoption, leverage Bitcoin mining, and introduce a national stablecoin. With approximately 40 million people, or 17% of the population, involved in cryptocurrency trading, Pakistan is reportedly the third-largest crypto market by retail activity.