The State Bank of Pakistan has notified all banking and financial institutions in the country that the prohibition on providing services to cryptocurrency companies has been lifted. However, according to the new regulations, banks are barred from using their own funds or customer deposits to invest in, trade, or hold cryptocurrency assets. This decision follows the recent implementation of the 2026 Virtual Assets Act, which established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee and regulate the sector.
The central bank has replaced its 2018 ban on cryptocurrency with new rules, allowing regulated banks and financial institutions to open accounts for cryptocurrency firms approved by PVARA. Under the new framework, banks can provide services to virtual asset service providers (VASPs) 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 stated, "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'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.
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 about 17% of Pakistan's population, are involved in cryptocurrency trading, according to the government's statement in February. Pakistan is the third-largest cryptocurrency market by retail activity, surpassing countries like Germany and Japan.