Pakistan Revokes Seven-Year Crypto Ban, Permitting Banks to Offer Services to Crypto Providers

The State Bank of Pakistan has officially lifted its seven-year ban on providing services to cryptocurrency businesses, notifying all banks and financial institutions of the change. While the new rules allow banks to offer services to licensed crypto firms, they explicitly prohibit these institutions from using their own funds or customer deposits to invest in, trade, or hold cryptocurrency assets. This development follows the recent passage of the 2026 Virtual Assets Act, which established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee and regulate the sector.

The State Bank of Pakistan has replaced its 2018 ban with new regulations that enable licensed banks and financial institutions to open accounts for crypto companies approved by PVARA. Under the new framework, banks can provide services to virtual asset service providers (VASPs) that are either licensed or seeking approval under the new crypto act, provided they adhere strictly to anti-money laundering, know-your-customer, and counter-terrorism financing regulations. According to the State Bank of Pakistan, "Subject to strict compliance with the outlined conditions, regulated entities may open bank accounts for entities duly licensed by PVARA as Virtual Asset Service Providers (VASPs)." The central bank has also outlined detailed conditions for onboarding crypto firms, including mandatory license verification, enhanced due diligence, and ongoing transaction monitoring. In a recent development, the Pakistani government and Binance signed a memorandum of understanding to explore the tokenization of up to $2 billion in bonds, treasury bills, and commodity reserves.

Additionally, the Chairman of Pakistan's Virtual Assets Regulatory Authority (VARA) announced plans to accelerate crypto adoption, leverage Bitcoin mining, and launch a national stablecoin. With approximately 40 million people, or 17% of the population, involved in crypto trading, Pakistan is the third-largest crypto market by retail activity, surpassing countries like Germany and Japan.