Pakistan central bank opens accounts for VASPs

TLDR

Pakistans State Bank has formally allowed banks to open rupee accounts for licensed crypto firms, moving the sector from blanket exclusion to tightly controlled access.

1. The central bank now lets banks serve virtual asset service providers (VASPs) licensed by the Pakistan Virtual Assets Regulatory Authority, but still bans banks from trading or holding crypto themselves.
2. VASP client funds must sit in segregated, non?interest?bearing rupee accounts under strict anti?money?laundering rules, which should reduce risk but also keeps the framework conservative.
3. The real impact depends on how quickly PVARA licenses firms and how many major banks actually start onboarding VASPs for remittances, exchanges, and local crypto businesses.

Deep Dive

1. What Pakistan Just Changed

Pakistans central bank has opened the formal banking system to licensed virtual asset service providers by allowing banks to open accounts for firms approved by PVARA, reversing a 2018 banking restriction on crypto-linked entities. This follows the Virtual Assets Act 2026, which created a legal framework and a dedicated regulator for virtual asset businesses, and effectively moves crypto from an unbanked grey zone into a supervised perimeter. Coverage explains that banks can only serve firms after verifying their PVARA license and full compliance with anti?money?laundering and other financial crime rules, emphasizing controlled access rather than deregulation.

Banks are still explicitly prohibited from investing in, trading, or holding virtual assets with their own funds or on behalf of customers, keeping traditional lenders on the fiat rail side of the system rather than turning them into crypto market participants.

2. How The New Accounts Work

Under the new rules, customer money linked to VASPs must be held in segregated, non?interest?bearing local currency accounts, sometimes described as dedicated client money accounts, with no commingling with the banks own funds or other client assets. Banks must continue ongoing transaction monitoring, risk profiling, and suspicious activity reporting under Pakistans existing financial crime regime, on top of checking that each VASP remains properly licensed.

This structure lets licensed exchanges, wallets, and other VASPs handle payroll, fiat ramps, and customer balances through local banks, while the central bank keeps tight control over exposure, foreign exchange, and sanctions risk.

3. Why It Matters And What To Watch

Pakistan has seen large informal crypto use, especially for remittances and inflation hedging, with estimates of tens of millions of users and heavy stablecoin flows operating outside the regulated banking system. By letting licensed VASPs access bank accounts, authorities aim to pull some of this activity onshore, improving oversight and potentially lowering remittance and transaction frictions if users shift from peer?to?peer or hawala-style channels.

Forward-looking commentary notes related initiatives, such as pilots exploring a dollar?linked stablecoin for cross?border payments and tokenization of sovereign assets, which depend on having a regulated banking gateway for crypto intermediaries. Key signals now will be how many top banks actually launch VASP services, how quickly PVARA processes licenses, and whether a meaningful share of remittance and trading volume migrates from offshore platforms into locally regulated firms.

Conclusion

Pakistans move does not make banks into crypto traders, but it does create a legal bridge between licensed VASPs and the domestic banking system after years of exclusion. If banks and PVARA move quickly, this could formalize a significant share of Pakistans existing crypto activity, especially remittances and stablecoin use, while keeping strict regulatory controls in place.