The State Bank of Pakistan has announced the lifting of its seven-year ban on providing services to cryptocurrency companies, allowing banks and financial institutions to offer their services to these firms. However, the new regulations stipulate that banks are not allowed to invest in, trade, or hold cryptocurrency using their own funds or customer deposits. This move follows the recent passage of the 2026 Virtual Assets Act, which established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee the sector. The central bank has replaced its 2018 ban with new rules that enable regulated banks and financial institutions to open accounts for cryptocurrency firms approved by PVARA.
Under these new regulations, banks can provide services to virtual asset service providers (VASPs) licensed under the new cryptocurrency act, as well as to those seeking approval, provided they comply with strict anti-money laundering (AML), know-your-customer (KYC), and counter-terrorism financing regulations. The State Bank of Pakistan has outlined detailed conditions for onboarding cryptocurrency firms, including mandatory license verification, enhanced due diligence, and ongoing supervision of transactions.
Recently, the Pakistani government signed a memorandum of understanding (MOU) with Binance, allowing the cryptocurrency exchange to explore tokenization opportunities in the country. Additionally, the Chairman of PVARA has 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 cryptocurrency market, surpassing countries like Germany and Japan.