Pakistan lifts eight-year ban: Banks can now serve crypto businesses, Virtual Asset Law officially enacted

Pakistan’s central bank lifted an eight-year cryptocurrency ban on April 14, allowing banks to provide account services to licensed virtual asset service providers.

According to ProPakistani, the State Bank of Pakistan (SBP) issued BPRD Circular Letter No. 10 of 2026 on April 14, officially ending the eight-year ban on cryptocurrency banking that had been in place since 2018, and permitting banks to offer account services to licensed Virtual Asset Service Providers (VASPs).

End of an Eight-Year Ban: Virtual Assets Act 2026 Officially Enters into Force

Since 2018, Pakistan has completely prohibited banks from dealing with cryptocurrency-related businesses, resulting in the country’s crypto market remaining in a gray area for a long time. Now, with the implementation of the Virtual Assets Act 2026, the Pakistan Virtual Asset Regulatory Authority (PVARA) has been formally established as the statutory authority responsible for reviewing and issuing operational licenses to VASPs.

Under the new regulations, banks can now open and maintain accounts for virtual asset service providers who have obtained a valid no-objection certificate (NOC) or official license from PVARA. This policy shift means that compliant crypto exchanges, custody services, and other VASP operators will have access to formal banking channels for the first time.

Strict Fund Segregation Requirements

It is noteworthy that while the new regulations open up opportunities, they also set clear red lines. The SBP requires banks to establish separate “Client Money Accounts” (CMAs) for VASP clients’ funds, ensuring complete segregation of customer assets from the operators’ own funds.

Additionally, banks are prohibited from investing, trading, or holding any virtual assets using their own funds or customer deposits — a ban that ensures traditional banking systems are not directly exposed to the volatility risks of crypto assets, serving only as a conduit for funds.

Geopolitical Context: Pakistan’s Role Growing in Importance

The timing of this policy shift is quite noteworthy. Pakistan has recently been playing an increasingly significant role on the international stage — the country hosted US-Iran ceasefire negotiations in Islamabad. Although the first round did not result in an agreement, Pakistan’s role as an intermediary has gained international recognition.

Analysts believe that Pakistan’s move to regulate crypto at this time is partly a response to the large domestic demand for crypto use (estimated to involve over 20 million users in Pakistan), and also a demonstration of the country’s commitment to economic reform and international integration. As global VASP regulatory frameworks gradually take shape, Pakistan’s actions could attract more international crypto companies to enter its market.

• This article is reprinted with permission from Chain News
• Original title: Pakistan Lifts Eight-Year Ban: Central Bank Allows Banks to Service Crypto Firms, Virtual Assets Law Officially Enters into Effect
• Original author: Elponcrab