The State Bank of Pakistan has officially notified all domestic banks and financial institutions that the longstanding ban on providing services to cryptocurrency entities has been revoked. Nevertheless, the new regulations stipulate that banks are still prohibited from engaging in cryptocurrency 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 has established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee and regulate the cryptocurrency sector.
The central bank has replaced its 2018 ban with new guidelines, allowing regulated banks and other financial institutions to open accounts for cryptocurrency firms that have been approved by PVARA. Under the new framework, banks are permitted to provide services to virtual asset service providers (VASPs) that have been licensed under the new cryptocurrency act, as well as to those seeking approval, provided they adhere to strict anti-money laundering (AML), know-your-customer (KYC), and counter-terrorism financing regulations. The State Bank of Pakistan has stated, "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's rules also outline detailed conditions for onboarding cryptocurrency firms, including mandatory license verification, enhanced due diligence, and ongoing supervision of all transactions.
In December, the Pakistani government and Binance signed a memorandum of understanding (MOU) to explore the tokenization of up to $2 billion in bonds, treasury bills, and commodity reserves in Pakistan. During the same month, the Chairman of Pakistan's Virtual Assets Regulatory Authority (VARA), Bilal Bin Saqib, announced plans to accelerate cryptocurrency adoption, leverage Bitcoin mining, and launch a national stablecoin in a video interview with CoinDesk. Approximately 40 million people, or around 17% of Pakistan's population, are involved in cryptocurrency trading, according to the government's statement in February. The country is reportedly the third-largest cryptocurrency market by retail activity, surpassing countries like Germany and Japan.