Pakistan's central banking authority has lifted its seven-year prohibition on providing services to cryptocurrency firms, notifying all banks and financial institutions that they are now allowed to do so. However, the new regulations stipulate that banks are not permitted to use their own funds or customer deposits to invest in, trade, or hold digital assets. This move follows the recent passage of the Virtual Assets Act of 2026, which established the Pakistan Virtual Asset Regulatory Authority to oversee and regulate the industry.
The central bank has replaced its 2018 ban with new guidelines that allow regulated financial institutions to open accounts for crypto companies licensed by the regulatory authority. Banks can provide services to virtual asset service providers, as well as those seeking approval, provided they comply with strict anti-money laundering, know-your-customer, and counter-terrorism financing regulations.
The new framework also outlines detailed conditions for onboarding crypto firms, including mandatory license verification, enhanced due diligence, and ongoing supervision of transactions. Recent developments in Pakistan's crypto space include a memorandum of understanding between the government and Binance to explore tokenization, as well as plans to accelerate crypto adoption and launch a national stablecoin. With approximately 40 million people, or 17% of the population, involved in crypto trading, Pakistan is the third-largest retail crypto market, surpassing countries like Germany and Japan.