Pakistan has officially lifted its ban on banking services for licensed cryptocurrency firms, marking a significant regulatory shift in the country’s digital asset landscape. The State Bank of Pakistan issued a formal circular confirming that regulated banks can now open accounts for virtual asset service providers (VASPs) operating under a new legal framework.
New framework for crypto banking access
This step comes after the enactment of the Virtual Assets Act 2026, establishing a structured approach to integrating digital asset businesses into Pakistan’s formal banking system. Under the new rules, only entities licensed by the Pakistan Virtual Assets Regulatory Authority (PVARA) are eligible to access basic financial services through local banks.
Bilal bin Saqib, chairman of PVARA, described this transition as a foundational move that aims to align the country’s financial sector with evolving global standards. The framework is designed to provide official oversight and legitimacy for cryptocurrency activities previously excluded from the mainstream financial sector.
Formed to regulate the cryptocurrency sector, PVARA has recently played a central role in establishing guidelines for digital asset providers. It develops licensing standards for virtual asset businesses and supervises compliance with national regulations on digital finance.
Strict rules to prevent financial risk
To ensure accountability, Pakistani banks must carry out full due diligence on VASP clients, keep risk profiles up to date, and promptly report suspicious activity to regulatory bodies. The new legal structure also mandates that client assets be kept in separate, non-interest-bearing accounts in Pakistani rupees, with the clear requirement that customer funds cannot be mixed with company capital.
Banks retain responsibility for ongoing monitoring to detect illicit transactions under anti-money laundering (AML) and counter-terrorism financing (CTF) standards. These safeguards are intended to address longstanding concerns over the misuse of digital assets in unlawful schemes and to satisfy both domestic and international compliance expectations.
Despite the relaxation in access to banking, financial institutions remain strictly prohibited from direct involvement with cryptocurrencies. Banks may not invest in, trade, or hold digital assets with their own funds or client resources. Their permitted activities are limited to facilitating banking services connected with licensed crypto operations and maintaining the security of fiat deposits linked to those accounts.
Major opening for global crypto firms
This regulatory turnaround marks a sharp break from Pakistan’s 2018 policy, which had effectively isolated crypto businesses from the formal economy and stifled sector growth. Under the previous restrictions, companies were unable to secure local banking services, leading to operational and liquidity challenges.
Recent government initiatives have sought to attract global digital asset players to Pakistan’s growing fintech market. Authorities signed a memorandum of understanding with Binance in December for potential tokenization solutions involving up to $2 billion in assets. The regulatory approval process for exchanges such as Binance and HTX has already begun, signaling Pakistan’s openness to international crypto businesses.
Efforts to modernize financial infrastructure have also included talks with affiliates of World Liberty Financial about the possible use of stablecoins for cross-border transactions. These developments position Pakistan to benefit from innovation in digital finance while aiming to ensure regulatory clarity and consumer protection.
