The central bank of Pakistan has notified all financial institutions in the country that the longstanding ban on providing services to cryptocurrency businesses has been lifted. However, under the new regulations, banks are not allowed to use their own funds or customer deposits to invest in, trade, or hold cryptocurrency assets. This development comes after the recent introduction of the Virtual Assets Act of 2026, which established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee the licensing and regulation of the sector.
Replacing its 2018 ban, the State Bank of Pakistan has introduced new rules that enable regulated banks and other financial institutions to open accounts for cryptocurrency firms that have been approved by PVARA. According to the new framework, banks can provide services to virtual asset service providers (VASPs) that are licensed under the new cryptocurrency act, as well as to those seeking approval, provided they adhere strictly to anti-money laundering (AML), know-your-customer (KYC), and counter-terrorism financing regulations. The State Bank of Pakistan has stated that, subject to strict compliance with the outlined conditions, regulated entities may open bank accounts for VASPs that have been duly licensed by PVARA.
Furthermore, the central bank's rules outline detailed conditions for onboarding cryptocurrency 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) that allows the world's largest cryptocurrency exchange by trade volume 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 announced plans to accelerate cryptocurrency adoption, leverage Bitcoin mining, and launch a national stablecoin. With approximately 40 million people, or around 17% of the population, involved in cryptocurrency trading, Pakistan is the third-largest cryptocurrency market by retail activity, surpassing countries like Germany and Japan.