Pakistan has lifted its seven-year crypto restriction and now allows banks to provide services to licensed virtual asset firms. Banks still cannot trade, invest in, or hold crypto using their own funds or customer deposits, while all approved activity must follow strict AML, KYC, and client fund segregation rules
Pakistan has opened formal banking access for licensed crypto firms after the State Bank of Pakistan replaced its 2018 restrictions with a new framework for regulated entities. The change allows banks and other SBP-regulated institutions to open accounts for virtual asset service providers licensed by the Pakistan Virtual Asset Regulatory Authority. Banks still cannot trade, invest in, or hold crypto with their own money or customer deposits.
SBP replaces the 2018 restriction
The State Bank of Pakistan issued its new circular on April 14, 2026. It said regulated entities may open bank accounts for firms licensed by PVARA and, in some cases, for firms that are in the approval process under the new regime. This replaces the central bank’s earlier 2018 position that blocked banks from dealing with virtual assets.
The new framework does not give banks permission to enter the crypto market themselves. Instead, it creates a narrow channel for licensed firms to access banking services under formal oversight. In the circular, the central bank said, “Subject to strict compliance with the conditions outlined herein, SBP Regulated Entities (REs) may open bank accounts of entities duly licensed by PVARA as Virtual Asset Service Providers (VASPs).”
Banks can serve crypto firms, but not hold crypto
Under the rules, banks may provide account services to approved VASPs, yet they remain barred from using their own funds or customer deposits to buy, trade, or hold virtual assets. This keeps a clear line between banking services and direct crypto exposure.
The central bank also requires segregated client structures for authorized activity. PVARA says licensed providers must follow clear operating and security standards, while the SBP framework adds tighter controls around how banks handle these relationships. This includes checking licenses before onboarding and keeping stronger supervision over activity linked to VASPs.
Banks must verify licenses and monitor transactions
The SBP framework places anti-money laundering and counter-terror financing checks at the core of the new system. Banks must verify PVARA credentials, perform enhanced due diligence, monitor transactions on an ongoing basis, and report suspicious activity under existing compliance rules.
PVARA’s public guidance also shows that firms must move through a staged process that starts with a no-objection certificate, followed by AML registration, local incorporation, and then full licensing. The regulator says VASPs must verify customer identities, monitor transactions, maintain records, and meet FATF-aligned standards.
Pakistan moves toward a regulated crypto market
The banking change follows the enactment of the Virtual Assets Act, 2026, which established PVARA as the licensing and supervisory authority for the sector. The law gives Pakistan a formal legal structure for exchanges, custodians, wallet operators, token issuers, and other service providers.
This step places crypto businesses inside a regulated financial channel rather than outside the banking system. PVARA describes its role as licensing, supervision, AML enforcement, and market oversight. Together, the new law and the SBP circular mark Pakistan’s first full move toward a controlled banking framework for licensed virtual asset firms.
