The State Bank of Pakistan has officially lifted its seven-year ban on providing services to cryptocurrency firms, allowing banks and financial institutions to open accounts for licensed virtual asset service providers. However, the new regulations stipulate that banks are not allowed to invest in, trade, or hold cryptocurrencies using their own funds or customer deposits. This development follows the recent passage of the Virtual Assets Act of 2026, which established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee and regulate the industry.
The central bank has replaced its 2018 ban with new rules that enable regulated banks and financial institutions to provide services to licensed virtual asset service providers (VASPs) and those seeking approval, provided they comply with strict anti-money laundering (AML), know-your-customer (KYC), 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 licensed by PVARA as Virtual Asset Service Providers (VASPs)." The rules also outline detailed conditions for onboarding cryptocurrency companies, including mandatory license verification, enhanced due diligence, and ongoing supervision of all transactions. In a recent development, the Pakistani government signed a memorandum of understanding (MOU) with Binance, allowing the global cryptocurrency exchange to explore tokenizing up to $2 billion in bonds, treasury bills, and commodity reserves in Pakistan. Additionally, the Chairman of Pakistan's Virtual Assets Regulatory Authority (VARA) announced plans to accelerate cryptocurrency adoption, leverage Bitcoin mining, and launch a national stablecoin.
With approximately 40 million people, or 17% of the population, involved in cryptocurrency trading, Pakistan is the third-largest retail crypto market, surpassing countries like Germany and Japan.