The central bank of Pakistan has officially lifted its seven-year prohibition on banking services for cryptocurrency companies. However, under the new regulations, banks are restricted from using their own funds or customer deposits to invest in, trade, or hold cryptocurrency assets. 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 State Bank of Pakistan has replaced its 2018 ban with new guidelines, allowing regulated financial institutions to open accounts for cryptocurrency firms that have been approved by the regulatory authority.
These institutions can provide services to licensed virtual asset service providers and those awaiting approval, provided they adhere to stringent anti-money laundering, know-your-customer, and counter-terrorism financing regulations. The central bank has outlined specific conditions for onboarding cryptocurrency companies, including mandatory license verification, enhanced due diligence, and continuous transaction monitoring. Recently, the Pakistani government signed a memorandum of understanding with Binance, the world's largest cryptocurrency exchange, to explore tokenizing up to $2 billion in bonds, treasury bills, and commodity reserves.
Furthermore, the Chairman of Pakistan's Virtual Assets Regulatory Authority announced plans to accelerate cryptocurrency adoption, leverage Bitcoin mining, and introduce a national stablecoin. With approximately 40 million people, or 17% of the population, involved in cryptocurrency trading, Pakistan is the third-largest retail crypto market, surpassing countries like Germany and Japan.