The State Bank of Pakistan has officially notified all banks and financial institutions that the long-standing ban on providing services to cryptocurrency businesses has been lifted. However, under the new regulations, banks are strictly prohibited 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 (PVARA) to oversee and regulate the sector. The central bank has replaced its 2018 ban with new rules, allowing regulated banks and 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 act, as well as to those seeking approval, provided they adhere to stringent anti-money laundering (AML), know-your-customer (KYC), and counter-terrorism financing regulations. The State Bank of Pakistan emphasized that banks may open accounts for entities licensed by PVARA as VASPs, subject to strict compliance with the outlined conditions. The central bank has also outlined detailed requirements 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) to explore the tokenization of 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 launch a national stablecoin. With approximately 40 million people, or around 17% of the population, involved in cryptocurrency trading, Pakistan is the third-largest crypto market by retail activity, surpassing countries like Germany and Japan.