Key Highlights
- State Bank of Pakistan allows banks to open accounts for licensed crypto firms, reversing its 2018 restriction.
- The access is limited to firms approved by the Pakistan Virtual Asset Regulatory Authority, with strict AML and compliance requirements.
- Banks cannot hold or trade crypto, reflecting a controlled, phased approach to integrating digital assets.
Pakistan’s central bank has formally allowed banks to provide services to licensed crypto companies, marking a policy shift after years of restrictions on virtual assets.
In a circular issued on April 14, the State Bank of Pakistan (SBP) said regulated entities can now open accounts for firms approved by the newly established Pakistan Virtual Asset Regulatory Authority (PVARA). The move replaces a 2018 directive that effectively barred banks from dealing with cryptocurrencies.
2018 ban replaced by new legal framework
The change follows the enactment of the Virtual Assets Act, 2026, which created PVARA as the country’s dedicated regulator for crypto-related activities.
Under the updated rules, banks must verify that any crypto firm they onboard holds a valid license issued by PVARA. This requirement forms the basis of a system where only regulated entities can access the banking system, while unlicensed activity remains outside formal channels.
Limited banking access with strict controls
The SBP has allowed only tightly controlled account structures for crypto firms. Banks are required to open dedicated client money accounts for transactions linked to virtual asset services, with clear separation between company funds and customer funds.
These accounts must be denominated in Pakistani rupees and cannot offer interest. They are also restricted from handling cash deposits or withdrawals, and funds held in them cannot be used as collateral for loans or other credit facilities.
Compliance and monitoring obligations
Banks are expected to apply enhanced due diligence before onboarding crypto firms, including assessing their business models, customer base, and geographic exposure.
Ongoing monitoring is mandatory, with suspicious transactions required to be reported under Pakistan’s anti-money laundering framework. Institutions must also update internal risk models to account for the specific risks tied to virtual asset service providers.
Despite opening access, the central bank has drawn a clear boundary: banks are not allowed to trade, hold, or invest in cryptocurrencies using their own funds or customer deposits. They also remain responsible for complying with all existing regulations, including foreign exchange rules, regardless of their engagement with crypto firms.
Gradual onboarding linked to licensing
The circular allows banks to provide limited-purpose accounts to firms that are in the process of obtaining licenses, but full banking services, including support for crypto-related transactions, are only permitted once licensing is complete.
The approach signals a phased integration of crypto businesses into Pakistan’s financial system, with regulatory oversight taking precedence over rapid expansion.
Also Read: Fed Nominee Kevin Warsh Discloses Crypto Exposure in Financial Filing
