Pakistan Removes Seven-Year Restriction on Banks Serving Crypto Providers

The State Bank of Pakistan has officially notified all banks and financial institutions that the long-standing ban on providing services to cryptocurrency companies has been lifted. However, the new regulations stipulate that banks are not allowed to use their own funds or customer deposits to invest in, trade, or hold cryptocurrency assets. This development follows the recent 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 guidelines, enabling regulated banks and financial institutions to open accounts for cryptocurrency firms that have been approved by PVARA. Under the new framework, banks can provide services to licensed virtual asset service providers (VASPs) and those seeking approval, provided they adhere to strict anti-money laundering (AML), know-your-customer (KYC), and counter-terrorism financing regulations. The State Bank of Pakistan has outlined specific conditions for onboarding cryptocurrency companies, including mandatory license verification, enhanced due diligence, and ongoing transaction monitoring. In a recent development, the Pakistani government signed a memorandum of understanding (MOU) with Binance, allowing the global cryptocurrency exchange to explore the tokenization of up to $2 billion in bonds, treasury bills, and commodity reserves. Furthermore, the Chairman of Pakistan's Virtual Assets Regulatory Authority (VARA) announced plans to accelerate cryptocurrency adoption, leverage Bitcoin mining, and launch a national stablecoin. According to the government, approximately 40 million people, or 17% of the Pakistani population, are involved in cryptocurrency trading, making the country the third-largest crypto market by retail activity.