The State Bank of Pakistan has officially lifted its seven-year ban on providing services to cryptocurrency companies, allowing banks and financial institutions to open accounts for crypto firms licensed under the newly enacted Virtual Assets Act. However, banks are still barred from using their own funds or customer deposits to invest in, trade, or hold cryptocurrencies. The new regulations permit banks to provide services to virtual asset service providers, provided they adhere to strict anti-money laundering, know-your-customer, and counter-terrorism financing regulations. The move follows the establishment of the Pakistan Virtual Asset Regulatory Authority, which will oversee the sector.
Banks are required to verify licenses, conduct enhanced due diligence, and monitor transactions of crypto firms. This development comes after the Pakistani government signed a memorandum of understanding with Binance to explore tokenization and announced plans to accelerate crypto adoption and launch a national stablecoin.
Approximately 40 million Pakistanis, or 17% of the population, are involved in crypto trading, making the country the third-largest crypto market by retail activity.