Pakistan's Central Bank Lifts 8-Year Crypto Ban, Allows Banks to Serve Virtual Asset Providers

The State Bank of Pakistan (SBP) has reversed an eight-year prohibition on banks engaging with the cryptocurrency sector. Under a newly issued circular, the country's financial institutions can now open and maintain accounts for registered virtual asset service providers (VASPs) and their customers.

«Pakistan has taken an important step toward formalising its virtual asset ecosystem. Following the enactment of the Virtual Assets Act, 2026, the State Bank of Pakistan has issued BPRD Circular Letter No. 10 of 2026, enabling regulated entities to open and maintain bank accounts…» — Pakistan Virtual Assets Regulatory Authority (@PakistanVARA), original post

Why This Matters

Pakistan is one of the most populous nations in South Asia, with over 230 million people. For eight years, its banks were barred from any involvement with cryptocurrencies. Lifting this restriction gives crypto businesses legal access to the banking infrastructure and allows users to interact with digital assets through conventional financial channels. The SBP's decision aligns with a broader global trend toward formalizing crypto regulation and could attract significant investment into Pakistan's digital asset market.

Banks Face Tight Restrictions Despite New Freedoms

While the ban has been lifted, the central bank has drawn clear boundaries. Banks are permitted only to provide account services — they remain prohibited from investing their own capital or client deposits in virtual assets, trading crypto, or offering custody services.

Crypto firms will be assigned dedicated accounts denominated in Pakistani rupees. These accounts must be kept strictly segregated from any other accounts held by the same companies. Commingling VASP funds with customer assets is explicitly forbidden.

On top of existing anti-money laundering and counter-terrorism financing (AML/CTF) requirements, banks must:

• conduct comprehensive due diligence on each VASP before onboarding;
• update client risk assessment models to account for crypto-specific risks;
• continuously monitor relationships with VASPs;
• report suspicious transactions to Pakistan's financial intelligence unit.

From Near-Total Ban to Comprehensive Regulation

Pakistan's journey toward crypto legalization has been gradual. As recently as 2022, the country was actively discussing a blanket ban on all cryptocurrency usage. Instead, authorities ultimately chose a regulatory path.

In July 2025, the government established the Pakistan Virtual Assets Regulatory Authority (PVARA), a dedicated body responsible for licensing market participants, setting AML standards, and enforcing compliance.

In March 2026, parliament passed the Virtual Assets Act, 2026, creating a comprehensive legal framework for the digital financial sector.

«The Virtual Assets Act, 2026 has been passed by Parliament, marking a major step toward establishing a comprehensive regulatory framework for Pakistan's rapidly growing digital financial sector. The law establishes the Pakistan Virtual Assets Regulatory Authority (PVARA), which…» — Pakistan Virtual Assets Regulatory Authority (@PakistanVARA), original post

International Partnerships and Stablecoin Ambitions

Alongside building its domestic regulatory framework, Pakistan has been actively courting foreign players. The government invited leading global crypto companies to apply for participation in the country's emerging digital economy.

Pakistan also signed a memorandum of understanding with SC Financial Technologies, a company affiliated with World Liberty Financial — the DeFi platform linked to the sons of U.S. President Donald Trump. The partnership aims to explore the use of the USD1 stablecoin for digital payments, including cross-border remittances.

Earlier in 2025, Pakistani authorities allocated 2 GW of electrical capacity for Bitcoin mining operations and AI data centers. Taken together, these initiatives signal a systematic effort to position Pakistan within the global crypto economy.