- Pakistan's central bank now allows banks to open accounts for licensed crypto firms, overturning a ban in place since 2018.
- Banks are barred from direct cryptocurrency investment, restricted to payment and fiat custody services only.
- The move could accelerate crypto adoption in a market of 240 million people, particularly for remittance flows.
The State Bank of Pakistan (SBP) has issued a circular formally reversing the ban on banking services for cryptocurrency firms that has been in place since 2018. This decision allows regulated financial institutions to open accounts for licensed virtual asset service providers (VASPs) under the oversight of the Pakistan Virtual Assets Regulatory Authority (PVARA). The move follows the enactment of the Virtual Assets Act 2026 and marks the country's first structured step to integrate digital asset businesses into its formal financial system.
This decision opens one of the world's most populous markets to the formal crypto ecosystem, boosting institutional and retail adoption in a key region for remittances.
Bilal bin Saqib, chairman of PVARA, stated in an official release that this is a foundational step in bringing virtual assets into Pakistan's formal financial system. The policy shift comes after years of restrictions that severely limited crypto industry growth in the nation, which has a population exceeding 240 million and a rising adoption rate, particularly among youth and the diaspora handling remittances.
Regulatory Framework and Bank Requirements
Under the new rules, banks can provide basic financial services to crypto firms but must first verify that these entities are licensed by PVARA. Strict safeguards have been implemented to mitigate financial risks and ensure compliance with anti-money laundering (AML) and counter-terrorism financing standards. Banks are required to conduct full due diligence, maintain updated risk profiles for VASP clients, and report suspicious transactions to regulators.
Pakistan makes a historic pivot by integrating cryptocurrencies into its formal financial system after years of prohibition.
Additionally, they must ensure client funds are held in segregated, non-interest-bearing accounts denominated in Pakistani rupees. Commingling of customer and company funds is strictly prohibited. This approach aims to protect consumers while enabling a formal channel for crypto operations, a model analysts view as balanced and potentially replicable by other emerging markets.
Limitations for Banks and Direct Exposure
However, the central bank has drawn a firm line regarding direct exposure to digital assets. Banks are explicitly barred from investing in, trading, or holding cryptocurrencies using either their own capital or customer deposits. Their role is limited to facilitating payment rails and custody of fiat funds tied to licensed crypto activity. This restriction reflects persistent caution among traditional regulators, who still view assets like Bitcoin and Ethereum as highly volatile and operationally risky.
This limitation means that while the crypto ecosystem gains banking access, Pakistani banks cannot directly benefit from cryptocurrency price appreciation. For instance, with Bitcoin trading around $75,012, up 1.4% in the past 24 hours, and Ethereum at $2,356 with a 1.5% gain, these profits remain out of direct institutional reach. Nonetheless, banking openness could boost retail liquidity and adoption, indirectly benefiting the broader market.
Historical Context and Policy Reversal
The decision represents a sharp reversal from Pakistan's 2018 policy, which effectively cut off crypto firms from the banking system and stifled industry growth. At that time, the SBP issued warnings about cryptocurrency risks and prohibited banks from processing related transactions. This led to a gray market where operators used personal accounts or informal methods, increasing security and money laundering risks.
“This is a foundational step in bringing virtual assets into the formal financial system of Pakistan.”
With the new framework in place, authorities are now positioning the country as a regulated hub for digital asset innovation. Pakistan has already taken steps to attract global crypto players. In December 2025, officials signed a memorandum of understanding with Binance to explore tokenization initiatives potentially involving up to $2 billion in assets, and have granted initial regulatory clearances to both Binance and HTX.
Impact on Global Crypto Markets
The news arrives amid broad strength in crypto markets. Bitcoin surpasses $75,000, Ethereum nears $2,400, and altcoins like Solana ($85.45, +2.9%), XRP ($1.41, +3.9%), and Cardano ($0.2503, +4.8%) show significant gains. Pakistan's opening, as one of the world's most populous economies, could add millions of potential users to the ecosystem, especially in a context where remittances form a crucial part of the economy.
Experts estimate remittances to Pakistan exceed $30 billion annually, and cryptocurrencies offer a faster, cheaper alternative to traditional channels. Formal banking integration could accelerate this trend, providing a bridge between the fiat system and digital assets. Furthermore, discussions with affiliates of World Liberty Financial about using stablecoins for cross-border payments indicate a broader vision for blockchain-based financial infrastructure.
Implications and What to Watch
This move places Pakistan in a position similar to India or Nigeria, markets that have oscillated between prohibition and regulation. The key will be practical implementation: how many licenses will be granted, how AML compliance will be monitored, and whether banks will adopt services swiftly. The ban on direct bank investment might limit initial institutional capital but opens doors for venture funds and private equity.
Long-term, if Pakistan succeeds in establishing a regulated crypto hub, it could attract foreign investment and tech talent, diversifying an economy facing inflationary and debt challenges. For global investors, this reinforces the narrative of mainstream crypto adoption in emerging markets, where the need for financial inclusion and payment efficiency drives innovation.
“Markets are always looking at the future, not the present.”
— Bitcoin Magazine
— TrendRadar Editorial