Pakistan Reverses Seven-Year Crypto Ban, Permitting Banks to Cater to Crypto Firms

The State Bank of Pakistan has officially lifted its seven-year ban on providing services to cryptocurrency companies, notifying all banks and financial institutions of the change. While the new rules prohibit banks from investing in, trading, or holding cryptocurrency using their own funds or customer deposits, they are now permitted to open accounts for crypto firms licensed by the Pakistan Virtual Asset Regulatory Authority (PVARA). This development follows the enactment of the 2026 Virtual Assets Act, which established PVARA to oversee and regulate the sector. Under the new framework, banks can provide services to virtual asset service providers (VASPs) that have been licensed or are seeking approval under the new crypto act, provided they adhere strictly to anti-money laundering, know-your-customer, and counter-terrorism financing regulations. The State Bank of Pakistan outlined the conditions for onboarding crypto firms, including mandatory license verification, enhanced due diligence, and ongoing transaction supervision. In a recent move, the Pakistani government signed a memorandum of understanding with Binance, allowing the exchange to explore tokenizing up to $2 billion in bonds, treasury bills, and commodity reserves. Additionally, the Chairman of Pakistan's Virtual Assets Regulatory Authority announced plans to accelerate crypto adoption, leverage Bitcoin mining, and introduce a national stablecoin. With approximately 40 million people, or around 17% of the population, involved in crypto trading, Pakistan is the third-largest retail crypto market, surpassing countries like Germany and Japan.