Pakistan ends its eight-year ban on crypto banking and the rules are strict

Pakistan’s central bank has reversed a 2018 prohibition that locked crypto firms out of the formal banking system, allowing licensed virtual asset service providers to open accounts for the first time in eight years. The move brings an estimated 27 million crypto users, and a market valued at over $20 billion, a step closer to regulated financial infrastructure.

The new policy replaces the blanket prohibition with a structured framework driven by the Virtual Assets Act 2026, signaling the government’s intent to regulate rather than suppress the sector.

“This is a foundational step in bringing virtual assets into the formal financial system of Pakistan,” — Bilal bin Saqib, Chairman, Pakistan Virtual Assets Regulatory Authority.

New rules define how banks can engage crypto firms

While the Pakistan crypto ban lifted opens the door for financial inclusion, the SBP has introduced strict guardrails governing how banks interact with crypto businesses.

Under the new framework, banks are permitted to open accounts only for VASPs licensed by the Pakistan Virtual Assets Regulatory Authority (PVARA). These accounts must be denominated in local currency and maintained as segregated “Client Money Accounts,” ensuring that customer funds are kept separate from company assets.

Crucially, banks are still prohibited from directly engaging in crypto activities. They cannot trade, invest in, or hold digital assets using either their own funds or customer deposits.

Financial institutions are also required to enforce enhanced compliance measures, including anti-money laundering (AML) checks, transaction monitoring, and reporting suspicious activities to regulators.

The central bank emphasized its cautious stance, stating that banks must continue “due diligence, risk profiling and reporting suspicious transactions,” while avoiding exposure to crypto assets themselves.

Why Pakistan crypto ban lifted now

The timing of the Pakistan crypto ban lifted reflects broader economic and technological considerations.

Pakistan ranks among the world’s largest crypto markets by user adoption, with an estimated 27 million users and billions of dollars in annual transaction volume.
Yet, until now, the absence of regulatory clarity forced much of this activity into informal or unregulated channels.

By lifting the ban, authorities aim to formalize this ecosystem, improve oversight, and capture economic value through taxation and compliance.

The move also aligns with Pakistan’s broader digital finance ambitions, including partnerships with global crypto firms and exploration of blockchain-based financial infrastructure.

Industry analysts view the shift as a pragmatic response to reality: crypto adoption persisted despite restrictions, making regulation a more viable path than prohibition.

Industry implications of Pakistan crypto ban lifted

The Pakistan crypto ban lifted is expected to unlock significant opportunities for fintech innovation, foreign investment, and financial inclusion.

With access to banking services, licensed crypto firms can now operate transparently, enabling fiat on-ramps, compliant transactions, and institutional participation.

The policy could also accelerate developments in areas such as remittances, tokenization of assets, and cross-border payments key priorities for Pakistan’s evolving digital economy.

However, challenges remain. The licensing process is still developing, and strict compliance requirements may slow onboarding for some firms. Questions around taxation, cybersecurity, and consumer protection also remain unresolved.

Even so, the shift from prohibition to regulation marks a defining moment. By choosing oversight over restriction, Pakistan is positioning itself within a growing global trend toward structured crypto adoption.

Conclusion

The Pakistan crypto ban lifted represents more than a policy change. It reflects a strategic pivot toward integrating digital assets into the country’s financial system.

While the framework remains tightly controlled, it provides a legal foundation for growth, signaling that Pakistan is moving from resistance to regulation in the global crypto economy.