Pakistan has ended a seven-year ban that blocked banks from servicing crypto businesses, opening the door for regulated access to a market that already counts tens of millions of local traders. The move sets clear limits: banks can support licensed crypto providers but cannot trade, invest in or hold digital assets themselves.

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Banks Can Serve Licensed Crypto Firms Only

The State Bank of Pakistan (SBP) notified all banks and financial institutions that they may now provide services to virtual asset service providers, or VASPs, that hold licenses from the Pakistan Virtual Asset Regulatory Authority (PVARA). The decision replaces the 2018 blanket ban on crypto-related banking.

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Under the new framework, banks can open and maintain accounts for VASPs that PVARA has approved or that are seeking approval. They must meet strict anti-money laundering , know-your-customer and counter-terrorism financing rules. The SBP set detailed onboarding conditions, including verification of licenses, enhanced due diligence and ongoing monitoring of transactions

Banks still face a strict prohibition on direct exposure to crypto. They cannot trade, invest in or hold digital assets with their own funds or with customer deposits. The central bank stressed that regulated entities may only provide banking services to licensed firms and cannot engage in crypto activity on their balance sheets.

Part of a Wider Virtual Asset Strategy

The policy change follows the 2026 Virtual Assets Act, which created PVARA to license, regulate and supervise the crypto sector. It comes as Pakistan develops broader plans for tokenized state assets, expanded Bitcoin mining and a national stablecoin.

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In December, the government and Binance signed a memorandum of understanding to explore tokenizing up to $2 billion in bonds, treasury bills and commodity reserves. That same month, PVARA Chairman Bilal Bin Saqib outlined plans to speed up crypto adoption, promote mining and launch a national stablecoin.

Countries such as China, Algeria, and Bangladesh still enforce blanket bans on cryptocurrency trading, use, and often mining, making almost all crypto activity illegal, whereas Pakistan is shifting from a broad banking prohibition to a more permissive, licensing-based regime that lets banks serve licensed virtual asset providers** while still blocking them from holding or trading crypto on their own books.