Pakistan Removes Seven-Year Restriction, Enabling Banks to Support Crypto Providers

The State Bank of Pakistan has announced the lifting of its ban on providing services to cryptocurrency businesses, allowing banks and financial institutions to open accounts for crypto firms that have been approved under the newly established Virtual Asset Regulatory Authority (PVARA). However, the new regulations stipulate that banks are not permitted to use their own funds or customer deposits to invest in, trade, or hold cryptocurrencies. This development follows the recent introduction of the 2026 Virtual Assets Act, which has paved the way for the regulation and supervision of the virtual asset sector in Pakistan. The State Bank of Pakistan has replaced its 2018 ban with new rules that allow regulated banks and financial institutions to provide services to virtual asset service providers (VASPs) that are licensed under the new 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.

According to the State Bank of Pakistan, "Subject to strict compliance with the conditions outlined, SBP Regulated Entities (REs) 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 supervision of all transactions. In a recent development, 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. 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. Approximately 40 million people, or around 17% of the Pakistani population, are involved in cryptocurrency trading, making it the third-largest crypto market by retail activity, surpassing countries like Germany and Japan.