The central bank of Pakistan has officially lifted its seven-year prohibition on providing services to cryptocurrency firms, allowing banks and other financial institutions to establish relationships with these entities. However, banks are still prohibited from directly investing in, trading, or holding digital assets 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 to oversee and regulate the sector.
The new rules enable licensed banks and financial institutions to provide services to virtual asset service providers that have been approved under the new regulatory framework, provided they adhere to strict anti-money laundering, know-your-customer, and counter-terrorism financing regulations. The State Bank of Pakistan has outlined specific conditions for onboarding cryptocurrency firms, including mandatory license verification, enhanced due diligence, and ongoing transaction monitoring. This move is part of Pakistan's broader efforts to embrace digital assets, with approximately 40 million of its citizens, or around 17% of the population, already involved in cryptocurrency trading.
The country has also announced plans to explore tokenization, accelerate crypto adoption, and launch a national stablecoin.