Pakistan Lifts Crypto Banking Ban: New Law Opens Regulated Access for Digital Asset Firms

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Pakistan Reverses 2018 Crypto Banking Restrictions as New Law Opens Regulated Access for Digital Asset Firms

Pakistan is now allowing digital asset companies to connect with the traditional banking system, after previously restricting their access. This change provides a regulated pathway for licensed firms to work with banks, but with careful monitoring and risk management in place.

Key Takeaways:

  • Pakistan enabled licensed crypto firms to access banking, reversing its earlier blanket restriction.
  • Banks must apply strict due diligence and FMU reporting when onboarding licensed firms.
  • Pakistan lifted its 2018 ban that blocked banks from processing, trading, or holding crypto assets.

SBP Circular Reverses 2018 Restriction, Opens Banking Access to VASPs

Pakistan is updating its rules for companies dealing with digital assets, moving towards a more organized and supervised system. The State Bank of Pakistan recently announced that banks it regulates can now open accounts for licensed crypto companies, as long as they follow specific rules to ensure compliance.

This notice explains changes made possible by new laws. It specifically acknowledges the legal rules that support these changes, stating:

Pakistan has passed the Virtual Assets Act of 2026, creating the Pakistan Virtual Asset Regulatory Authority (PVARA). PVARA will be the official body in charge of licensing and overseeing all virtual asset activities within the country.

Now that this new system is established, the rule cancels the previous limitation and permits banks to open accounts for companies officially licensed as virtual asset service providers, as long as they fully follow the specified requirements. Specifically, banks overseen by the State Bank of Pakistan (SBP) can work with these licensed companies, provided they meet all conditions outlined in the directive.

The policy shift marks a clear reversal from SBP BPRD Circular No. 03 of 2018, issued on April 6, 2018. In that earlier directive, the central bank stated: “Virtual currencies (VCs) like bitcoin, litecoin, pakcoin, onecoin, dascoin, pay diamond etc. or initial coin offerings ( ICO) tokens are not legal tender, issued or guaranteed by the government of Pakistan.” It also said regulated institutions “are advised to refrain from processing, using, trading, holding, transferring value, promoting and investing in virtual currencies/tokens.” The 2018 circular covered banks, development finance institutions, microfinance banks, payment system operators, and payment service providers. The central bank emphasized at the time: “Any transaction in this regard shall immediately be reported to Financial Monitoring Unit (FMU) as a suspicious transaction.”

SBP Maintains Strict Controls on VASP Banking Access

The new rules set specific requirements for how banks operate and comply with regulations. Banks are now required to directly confirm that Virtual Asset Service Providers (VASPs) have valid licenses with PVARA before working with them. They also need to create separate bank accounts for client funds to handle approved transactions. These accounts won’t earn interest, must be in Pakistani rupees, and can’t be used for cash transactions or as security for loans.

In addition to these protections, companies must strengthen their checks on other digital asset businesses (VASPs) by reviewing how they operate, how they onboard customers, and where they operate geographically. They also need to update their risk assessment systems to include the specific risks of digital assets, and continue to monitor transactions for anything suspicious, reporting it to the financial authorities as required by law.

This guidance also explains how companies can eventually get fully authorized. Those currently with a no-objection certificate from PVARA can use special accounts to finish the licensing process, but they won’t be able to offer full services until they receive official approval. The document also emphasized:

“REs shall not invest, trade or hold virtual assets using their own funds or customer deposits.”

This limit shows the State Bank of Pakistan is being careful, aiming to allow access while also managing risks and ensuring it follows all relevant rules and regulations.

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2026-04-15 17:27