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

The State Bank of Pakistan has officially lifted its seven-year ban on providing services to cryptocurrency companies, allowing banks and financial institutions to open accounts for crypto firms that have been approved by the Pakistan Virtual Asset Regulatory Authority (PVARA). While the new rules permit banks to provide services to virtual asset service providers, they are strictly prohibited from using their own funds or customer deposits to invest in, trade, or hold cryptocurrency assets. This development follows the recent passage of the Virtual Assets Act of 2026, which established PVARA as the regulatory body responsible for overseeing the virtual asset sector in Pakistan. Under the new framework, banks are permitted to provide services to licensed virtual asset service providers, as well as those seeking approval, provided they comply with stringent anti-money laundering, know-your-customer, 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 move, the Pakistani government signed a memorandum of understanding with Binance, the world's largest cryptocurrency exchange, to explore the tokenization of up to $2 billion in bonds, treasury bills, and commodity reserves. Additionally, the Chairman of PVARA has announced plans to accelerate cryptocurrency adoption, leverage Bitcoin mining, and launch a national stablecoin, with approximately 40 million Pakistanis, or 17% of the population, already involved in cryptocurrency trading. Pakistan is now the third-largest crypto market by retail activity, surpassing countries like Germany and Japan.