Pakistan Reverses Seven-Year Crypto Ban, Permitting Banks to Support Digital Asset Providers

The State Bank of Pakistan has officially lifted its ban on providing services to cryptocurrency firms, notifying all banks and financial institutions that they can now offer their services to these companies. However, banks are still barred from using their own funds or customer deposits to invest in, trade, or hold cryptocurrency. This move follows the introduction of the 2026 Virtual Assets Act, which establishes the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee and regulate the sector. The new rules allow regulated banks to open accounts for cryptocurrency firms licensed by PVARA, as well as those seeking approval, provided they comply with anti-money laundering and know-your-customer regulations. The central bank has outlined strict conditions for onboarding cryptocurrency firms, including mandatory license verification and ongoing transaction supervision. This development comes after the Pakistani government signed a memorandum of understanding with Binance to explore tokenizing bonds and commodity reserves, and announced plans to accelerate cryptocurrency adoption and launch a national stablecoin. Approximately 40 million people in Pakistan, or around 17% of the population, are involved in cryptocurrency trading, making the country the third-largest crypto market by retail activity.