A Major Policy Reversal
After nearly a decade of restrictions, the State Bank of Pakistan has officially lifted its 2018 ban, allowing banks to work with crypto firms again.
Under the new rules, financial institutions can now open accounts for licensed virtual asset providers, marking a decisive shift from outright restriction to structured regulation.
This move is backed by the newly passed Virtual Assets Act 2026, which created a dedicated regulator-the Pakistan Virtual Assets Regulatory Authority-to oversee the industry.
What the New Banking Framework Looks Like
The new system isn’t a free-for-all-it’s tightly controlled.
Banks must first verify that crypto firms are licensed or approved by PVARA before onboarding them. Once approved, they are required to maintain segregated client accounts in Pakistani rupees, ensuring user funds are kept separate from company funds.
At the same time, there are strict limitations. Banks are not allowed to trade, invest, or hold crypto themselves, and these accounts cannot be used for cash deposits or withdrawals.
For companies still in the licensing process, banks can open limited accounts-but full transactional access only comes after full approval.
The entire framework is layered with strict AML and compliance rules, signaling that Pakistan wants growth—but under control.
From Shadow Market to Formal System
This shift is long overdue.
Since the 2018 ban, Pakistan’s crypto activity didn’t disappear-it just moved underground. The country has quietly become one of the largest informal crypto markets in the world, with an estimated 30–40 million users.
According to Chainalysis, Pakistan ranked third globally in crypto adoption in 2025, driven by remittances, stablecoin usage, and mobile-first finance.
In other words, the demand was already there-the regulation just wasn’t.
Now, the government is trying to pull that activity into the formal economy.
The Road to Regulation
The transition didn’t happen overnight.
In 2025, Pakistan began laying the groundwork by establishing PVARA and issuing early approvals to major platforms. That effort was solidified in 2026 when the Virtual Assets Act formally turned the authority into a permanent regulator.
The latest banking circular is the final piece-connecting crypto to the traditional financial system.
It signals a clear policy direction, crypto is no longer being ignored-it’s being structured.
Big Ambitions Behind the Move
Pakistan isn’t just regulating crypto-it’s planning to build around it.
The country is exploring the use of surplus electricity for Bitcoin mining, while also considering the tokenization of up to $2 billion in government assets.
At the same time, officials are testing stablecoins for remittances and preparing for a potential central bank digital currency (CBDC) rollout.
What makes this approach unique is the inclusion of a Shariah Advisory Committee, integrating Islamic finance principles into crypto regulation-something very few countries have attempted at scale.
The Real Challenge Ahead
The framework is in place-but execution is everything.
The success of this shift will depend on how quickly PVARA moves from issuing temporary approvals to full licenses, and how smoothly banks adapt to the new compliance-heavy system.
If done right, Pakistan could become a model for regulated crypto adoption in emerging markets.
If not, it risks falling back into fragmentation between formal rules and real-world usage.
