State Bank of Pakistan has lifted its ban on crypto banking

The State Bank of Pakistan (SBP) has authorized regulated banks in the country to open and maintain accounts for virtual asset service providers (VASPs) licensed by or holding no-objection certificates (NOCs) from the Pakistan Virtual Assets Regulatory Authority (PVARA).

The circular replaces the one from 2018 that had barred financial institutions from dealing with crypto-related entities.

The latest change in rules by the nation’s apex bank is enabled by the recent enactment of the Virtual Assets Act, 2026, which created PVARA as the country’s dedicated regulator for crypto-related activities.

What does the new banking framework actually require?

According to the circular, banks must verify a VASP’s PVARA license before onboarding. They are also required to open segregated client money accounts, which are Pakistani rupee (PKR)-denominated, non-remunerative accounts that are used exclusively to settle authorized VASP transactions.

Cash deposits and withdrawals are not allowed within these accounts, and VASP funds must not be mixed with client funds or pledged as collateral.

The circular also stated that regulated entities must not invest, trade, or hold virtual assets using their own funds or customer deposits.

Banks may also open limited-purpose accounts for NOC holders who are still completing the path to full licensing, though transactional services may only be extended once a full PVARA license is granted.

VASPs and their customers are also subject to strict compliance and AML/CFT requirements under the new circular, with the country’s anti-money laundering act of 2010 still very active.

The banks are also expected to conduct complete due diligence on any VASP, amend their customer risk profiling models to account for virtual asset risks, and monitor relationships on an ongoing basis.

How did Pakistan arrive at this point?

The 2018 circular left one of the world’s most active informal crypto markets entirely outside the formal banking system. Pakistan ranks among the top countries globally for cryptocurrency adoption, with estimates placing the number of users at 30-40 million.

Chainalysis’s 2025 Global Crypto Adoption Index ranked Pakistan third worldwide, noting that the ranking reflects crypto’s growing role in remittances, dollar access via stablecoins, and mobile-first financial services across emerging economies.

In July 2025, President Asif Ali Zardari established PVARA on a temporary basis, prompting the issuance of NOCs to Binance and HTX.

The Parliament then passed the Virtual Assets Act, 2026, in March, converting PVARA into a permanent statutory body.

Does the framework match the scale of Pakistan’s crypto ambitions?

Pakistan is quite ambitious, having announced plans to allocate surplus electricity for Bitcoin mining and AI data centers, and is exploring the tokenization of up to $2 billion in government assets.

The nation is also testing dollar-linked stablecoins for remittances alongside preparations for a central bank digital currency pilot. The framework also includes a Shariah Advisory Committee, making Pakistan one of the first countries to integrate Islamic finance principles into crypto regulation.

Bridging those ambitions with the realities of formal banking integration will depend heavily on how quickly PVARA moves from issuing NOCs to granting full licenses.

As PVARA noted on its X account, the circular marks a transition from a previously restrictive environment to a structured, regulated framework and reflects continued coordination between policymakers, regulators, and industry stakeholders.

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