Pakistan lifts seven-year ban, allowing banks to service crypto providers

Pakistan’s central bank notified all banks and financial institutions in the country that the ban on providing crypto services has been lifted.

However, according to the new state bank rules, banks are banned from investing, trading or holding crypto assets using their own funds or customer deposits.

The State Bank of Pakistan’s move follows the recent enactment of the 2026 Virtual Assets Act, which establishes Pakistan’s Virtual Asset Regulatory Authority (PVARA to license, regulate and supervise the sector.

The central bank replaced its 2018 ban on crypto with new rules that permit regulated banks and other financial institutions to open accounts for crypto firms approved under PVARA.

Under the new state bank framework, banks can provide services to virtual asset service providers (VASPs) licensed under the new crypto act, as well as to those seeking approval, subject to strict compliance with anti-money laundering (AML), know-your-customer (KYC), and other counter-terrorism financing regulations.

“Subject to strict compliance with the conditions outlined herein, SBP Regulated Entities (REs) may open bank accounts of entities duly licensed by PVARA as Virtual Asset Service Providers (VASPs),” the State Bank of Pakistan said.

The central bank’s rules also set out detailed conditions for onboarding crypto firms, which include mandatory verification of licenses, enhanced due diligence and ongoing supervision of all their transactions.

In December, the government of Pakistan and Binance signed a memorandum of understanding (MOU) allowing the world’s largest crypto exchange by trade volume to explore the tokenization of up to $2 billion in bonds, treasury bills and commodity reserves in Pakistan.

That same month, the Chairman of Pakistan's Virtual Assets Regulatory Authority (VARA), Bilal Bin Saqib, announced in a video interview with CoinDesk his country’s plans to accelerate crypto adoption, leverage Bitcoin mining, and launch a national stablecoin.

Roughly 40 million or about 17% of the Pakistani population are involved in crypto trading, the government said in February. The country is the third-largest crypto market by retail activity, ahead of places like Germany and Japan.