Pakistan Reverses Seven-Year Crypto Ban, Permitting Banks to Offer Services to Crypto Providers

The State Bank of Pakistan has officially lifted its seven-year ban on providing services to cryptocurrency firms, notifying all banks and financial institutions that they can open accounts for crypto businesses licensed by the Pakistan Virtual Asset Regulatory Authority (PVARA). However, the new regulations stipulate that banks are not allowed to use their own funds or customer deposits to invest in, trade, or hold cryptocurrency assets. This decision follows the introduction of the 2026 Virtual Assets Act, which established PVARA to oversee and regulate the virtual asset sector in Pakistan. The central bank 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 or seeking approval under PVARA, provided they comply with 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 outlined conditions, SBP Regulated Entities (REs) are permitted to open bank accounts for entities duly licensed by PVARA as Virtual Asset Service Providers (VASPs).' The central bank's framework also outlines detailed conditions for onboarding crypto firms, including mandatory license verification, enhanced due diligence, and ongoing transaction monitoring. In a recent development, the Pakistani government signed a memorandum of understanding (MOU) with Binance, the world's largest crypto exchange, 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 in a video interview with CoinDesk. With approximately 40 million people, or 17% of the population, involved in crypto trading, Pakistan is the third-largest crypto market by retail activity, surpassing countries like Germany and Japan.