Pakistan's central bank has officially repealed the cryptocurrency ban that had been in place since 2018. The new regulations permit roughly 40 million active crypto users to trade under a licensed framework, but prohibit banks from investing in crypto assets using their own funds or customer deposits.
Ban Lifted, But Banks Face Restrictions
The updated policy, issued by the State Bank of Pakistan, allows licensed entities under the Pakistan Virtual Assets Regulatory Authority (PVARA) to open bank accounts. However, banks are barred from trading cryptocurrencies, holding such assets, or using client money for crypto investments. The move opens a pathway for digital finance while strictly limiting banks' direct involvement.
2026 Virtual Assets Act Provides Regulatory Backbone
The policy shift is built on the 2026 Virtual Assets Act, which established PVARA as the dedicated regulator for licensing, supervision, and industry oversight. Crypto companies can now operate within a defined legal framework. The central bank stated that "provided that all prescribed conditions are strictly observed, institutions regulated by the Central Bank can open bank accounts for virtual asset service providers officially licensed by PVARA."
Strict Compliance Requirements for Banks
Banks seeking to serve crypto-related firms must verify licensing, conduct comprehensive due diligence, and undergo ongoing regulatory audits. All operations must comply with anti-money laundering (AML), customer identification (KYC), and counter-terrorism financing standards. Only virtual asset service providers (VASPs) that are formally licensed or in the approval process with PVARA are eligible for banking services.
Binance Deal: $2 Billion Tokenization Agreement
In December, the Pakistani government signed a major agreement with Binance, the world's largest crypto exchange by volume, to tokenize up to $2 billion in bonds, treasury bills, and commodity reserves. Bilal Bin Saqib, head of PVARA, told CoinDesk that Pakistan aims to accelerate crypto adoption, benefit from Bitcoin mining, and launch a national stablecoin soon.
40 Million Active Users: Retail Adoption Soars
Official data released in February shows that approximately 40 million people (roughly 17% of the population) actively trade cryptocurrencies in Pakistan. That makes the country's retail crypto market larger by user count than Germany and Japan. With the ban lifted, adoption is expected to accelerate further.