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

The State Bank of Pakistan has officially lifted its ban on providing services to cryptocurrency firms, allowing banks and financial institutions to open accounts for companies licensed under the new Virtual Assets Act. However, these institutions are still barred from using their own funds or customer deposits to invest in, trade, or hold cryptocurrency. The new regulations permit banks to provide services to licensed virtual asset service providers and those seeking approval, provided they adhere to strict anti-money laundering, know-your-customer, and counter-terrorism financing regulations. The move follows the recent enactment of the Virtual Assets Act, which established the Pakistan Virtual Asset Regulatory Authority to oversee the sector. Banks are now required to verify licenses, conduct enhanced due diligence, and supervise transactions for crypto firms. This development comes after the Pakistani government signed a memorandum of understanding with Binance to explore tokenization opportunities and announced plans to accelerate crypto adoption 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.