Pakistan Ends Eight-Year Crypto Ban, Authorizes Banking Services for Licensed VASPs

The State Bank of Pakistan (SBP) has issued a circular permitting commercial banks to open accounts for licensed Virtual Asset Service Providers (VASPs) and their clients, effectively ending a restrictive era that began in 2018. This policy shift marks a transition from an outright ban toward a structured, regulated environment for digital assets. This regulatory pivot is underpinned by the Virtual Assets Act 2026, passed in March, which created the Pakistan Virtual Assets Regulatory Authority (PVARA). The PVARA now serves as the statutory body tasked with the licensing, regulation, and oversight of all virtual asset activities within the country. Under the new guidelines, banks must utilize separate 'Client Money Accounts' (CMAs) denominated in Pakistani rupees to ensure the strict segregation of client assets from VASP corporate funds. However, the SBP has explicitly forbidden banks from using their own capital or customer deposits to trade, hold, or invest in virtual assets, limiting the banks' role strictly to service provision. To mitigate financial crime, the SBP requires banks to implement enhanced due diligence and update risk profiling models specifically for VASPs. All suspicious activities must be reported to the national Financial Monitoring Unit, ensuring compliance with existing anti-money laundering (AML) and counter-financing terrorism (CFT) protocols. The move follows high-level engagements with global exchanges such as Binance and HTX, as well as explorations into stablecoin-based cross-border payments. By integrating crypto firms into the formal banking system, Pakistan aims to attract regulated trading platforms and modernize its financial infrastructure.