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

The State Bank of Pakistan has officially notified all banking and financial institutions that the longstanding ban on providing services to cryptocurrency entities has been lifted. However, the new regulations stipulate that banks are not permitted to use their own funds or customer deposits to invest in, trade, or hold crypto assets. This move follows the introduction of the Virtual Assets Act of 2026, which led to the establishment of the Pakistan Virtual Asset Regulatory Authority (PVARA). The central bank has replaced its 2018 ban with new rules, enabling regulated banks and financial institutions to open accounts for crypto firms that have been approved by PVARA. Under the new framework, banks can provide services to licensed virtual asset service providers (VASPs) and those awaiting approval, provided they adhere to stringent anti-money laundering, know-your-customer, and counter-terrorism financing regulations. The State Bank of Pakistan has outlined specific conditions for onboarding crypto firms, including mandatory license verification, enhanced due diligence, and continuous transaction monitoring. Recently, the Pakistani government and Binance signed a memorandum of understanding to explore tokenization opportunities. Furthermore, the Chairman of PVARA has announced plans to accelerate crypto adoption and launch a national stablecoin. Approximately 40 million people in Pakistan, or around 17% of the population, are involved in crypto trading, making the country the third-largest retail crypto market.