Pakistan Ends Eight-Year Banking Ban for Licensed Crypto Firms Under New Virtual Asset Framework
The State Bank of Pakistan (SBP) has allowed commercial banks to open accounts for licensed digital currency businesses, ending an eight-year restriction that had kept the sector outside the formal banking system. The move follows the enactment of the Virtual Assets Act 2026 and marks a significant regulatory shift for Pakistan’s digital asset market.
According to Reuters, the central bank issued a circular to regulated entities outlining the new compliance requirements for servicing virtual asset businesses. Under the updated framework, banks must first verify that a company holds a licence from the newly established Pakistan Virtual Asset Regulatory Authority before offering account services.
The policy change is expected to create new opportunities for cross-border payments and strengthen financial links with regional digital asset hubs, including the UAE. It also signals Pakistan’s intent to bring virtual asset activity into a supervised banking environment rather than leaving it outside the formal financial system.
New Banking Rules for Digital Asset Providers
Under the SBP’s requirements, lenders must open separate client money accounts in Pakistani rupees for authorised transactions. These accounts must be non-interest-bearing and used solely for settlement purposes. The central bank also prohibited banks from trading or holding digital currencies using their own funds or customer money.
To reduce the risk of misuse, cash deposits and withdrawals from client money accounts are not permitted. The regulator said this measure is intended to prevent commingling between corporate and user funds.
Banks are also required to carry out enhanced due diligence before onboarding digital asset firms. This includes assessing the company’s business model, customer base and the jurisdictions in which it operates. In addition, lenders must revise customer risk profiling frameworks to reflect the specific risks associated with virtual assets.
The SBP further instructed financial institutions to monitor activity continuously and report suspicious transactions immediately to the Financial Monitoring Unit.
Licensing Status Determines Account Access
The central bank said companies that have received only an initial no-objection certificate may open limited-purpose accounts. Full transactional banking services will be available only after a provider secures its final operating licence.
Bilal bin Saqib, Chairman of the Pakistan Virtual Asset Regulatory Authority, described the change as a major milestone. “This is a foundational step in bringing virtual assets into the formal financial system of Pakistan,” he said.
Pakistan’s latest regulatory move comes amid broader efforts to position the country as a more active participant in the digital asset economy. The article notes that Pakistan has previously signed agreements with Binance to explore asset tokenisation and has granted initial clearances to international exchanges. Officials have also highlighted blockchain as critical infrastructure in recent industry discussions.
Industry Analysis
The reopening of banking access for licensed crypto businesses could improve operational certainty for firms seeking to serve Pakistani users or build regional payment flows. For banks, the new rules create a controlled pathway to engage with a fast-growing sector while maintaining compliance safeguards around licensing, customer due diligence and transaction monitoring.
For the wider market, the development may strengthen Pakistan’s connectivity with Middle Eastern fintech and digital asset ecosystems. However, the success of the framework will depend on how effectively regulators and banks implement the new controls and how quickly firms can move from no-objection approvals to full operating licences.
