Pakistan lifts ban on crypto services

TLDR

Pakistan has ended its 2018 crypto banking ban, letting banks serve licensed crypto firms under strict rules while still barring them from trading or holding crypto themselves.

1. The State Bank of Pakistan now allows banks to open accounts for licensed virtual asset service providers under the 2026 Virtual Assets Act, reversing its earlier blanket restriction.
2. Banks can provide fiat rails and client accounts to crypto companies but must segregate funds, apply tight AML/KYC controls, and cannot buy, hold, or trade crypto with their own or customer money.
3. Pakistan is positioning for tokenized assets, mining, and a national stablecoin, so the key next step is which exchanges and platforms secure licenses and how quickly banking access scales.

Deep Dive

1. New Rules And Who They Cover

On 14 April 2026, the State Bank of Pakistan (SBP) issued BPRD Circular Letter No. 10 of 2026, which reverses its 2018 ban and permits regulated banks to open accounts for licensed Virtual Asset Service Providers (VASPs) under the new Virtual Assets Act 2026 and the Pakistan Virtual Asset Regulatory Authority (PVARA) framework. This replaces the earlier instruction that barred banks from processing, trading, or holding virtual currencies and formally integrates crypto firms into the banking system under supervision. Banks may now serve PVARA-licensed exchanges, brokers, and custodians, but only as fiat service providers, not as crypto market participants themselves.

2. What It Means For Users And Firms

Under the new rules, banks can open rupee-denominated client money accounts for licensed crypto firms, which must be non interest bearing, cannot accept cash deposits, cannot be used as collateral, and must keep client funds fully segregated from company funds. At the same time, banks are explicitly prohibited from investing in, trading, or holding crypto with their own capital or customer deposits, and must apply enhanced anti money laundering (AML), know your customer (KYC), and counter terrorism financing checks, reporting suspicious activity to the Financial Monitoring Unit. For Pakistan, already cited as one of the worlds largest retail crypto markets with tens of millions of users, this shift moves a previously informal, offshore heavy ecosystem into a more regulated, bank connected environment.

3. Broader Strategy And What To Watch

Officials have framed the move as part of a wider digital asset strategy that includes tokenizing up to about 2 billion dollars of state assets with help from large exchanges, expanding Bitcoin mining, and developing a national stablecoin for remittances and debt management. Pakistan has also engaged with firms like Binance and World Liberty Financial on tokenization and stablecoin use for cross border payments, signaling that regulators view crypto as an infrastructure and capital markets tool rather than purely speculative trading. The big practical questions now are which exchanges and custodians receive PVARA licenses, how demanding compliance proves in practice, and whether implementation keeps pace with user demand without driving activity back into unregulated channels.

Conclusion

Pakistans decision shifts crypto from an outright banking ban to a tightly supervised, license based model that connects VASPs to banks while keeping banks off the trading field. If licensing and supervision are executed clearly, this could improve fiat access and transparency for a huge existing user base and support tokenization and stablecoin projects, though heavy compliance and cautious banks may slow the transition in the short term.