Pakistan's central bank has officially lifted its seven-year ban on banks providing services to cryptocurrency firms, notifying all financial institutions in the country of the change. However, the new rules stipulate that banks are not allowed to use their own funds or customer deposits to invest in, trade, or hold cryptocurrency assets. This move follows the recent passage of the 2026 Virtual Assets Act, which established the Pakistan Virtual Asset Regulatory Authority (PVARA) to oversee the sector. The State Bank of Pakistan has replaced its 2018 ban with new regulations that permit banks to open accounts for cryptocurrency companies licensed by PVARA.
Under these new rules, banks can provide services to virtual asset service providers (VASPs) that are either licensed or seeking approval under the new crypto act, provided they comply with strict anti-money laundering (AML), know-your-customer (KYC), and counter-terrorism financing regulations. The central bank has outlined detailed conditions for onboarding cryptocurrency firms, including mandatory license verification, enhanced due diligence, and ongoing supervision of transactions. This development comes after the Pakistani government signed a memorandum of understanding with Binance to explore tokenizing up to $2 billion in bonds, treasury bills, and commodity reserves.
Additionally, the Chairman of PVARA has announced plans to accelerate cryptocurrency adoption, leverage Bitcoin mining, and launch a national stablecoin. With approximately 40 million people, or about 17% of the population, involved in cryptocurrency trading, Pakistan is the third-largest crypto market by retail activity, surpassing countries like Germany and Japan.