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

The central bank of Pakistan has officially lifted its ban on providing services to cryptocurrency businesses, issuing a notice to all banks and financial institutions in the country. However, the new regulations stipulate that banks are not allowed to use their own funds or customer deposits to invest in, trade, or hold cryptocurrencies. This move follows the recent passage of the 2026 Virtual Assets Act, which established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee the sector. The State Bank of Pakistan has replaced its 2018 ban with new rules that allow regulated banks and financial institutions to open accounts for crypto firms that have been approved by PVARA. Under the new framework, banks can offer services to licensed virtual asset service providers (VASPs) and those seeking approval, provided they comply with anti-money laundering (AML), know-your-customer (KYC), and counter-terrorism financing regulations. The central bank has outlined strict conditions for onboarding crypto firms, including mandatory license verification, enhanced due diligence, and ongoing transaction monitoring. This development comes after the Pakistani government signed a memorandum of understanding with Binance to explore tokenization opportunities and the Chairman of PVARA 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 retail crypto market, surpassing countries like Germany and Japan.