Pakistan Opens Banking Access to Crypto Firms Under New Regulated Framework

Pakistan has formally shifted its stance on digital assets, allowing banks to provide services to licensed crypto businesses for the first time since restrictions were introduced in 2018. The move, led by the State Bank of Pakistan, follows the enactment of the Virtual Assets Act 2026 and marks a transition toward a controlled, licensing-based regime.

Under new guidance issued on April 14, banks can open accounts and facilitate transactions for firms authorised by the Pakistan Virtual Assets Regulatory Authority, the newly established body overseeing virtual asset activity. This replaces the previous blanket prohibition on crypto-related banking relationships.

The updated framework draws a clear boundary between access and exposure. While banks may support licensed virtual asset service providers (VASPs), they remain prohibited from trading, investing in, or holding digital assets—whether on their own balance sheets or on behalf of clients. Their role is limited to providing payment rails and account infrastructure.

To manage risks, the central bank has imposed strict operational and compliance requirements. Banks must conduct enhanced due diligence before onboarding VASPs, assign risk ratings, and maintain continuous monitoring of transactions. All suspicious activity must be reported to the country’s financial intelligence authorities.

In addition, dedicated client money accounts denominated in local currency are required to ensure segregation of funds and prevent commingling. Existing obligations—particularly around anti-money laundering, counter-terrorism financing, and foreign exchange controls—remain fully applicable.

The policy shift reflects a broader recalibration rather than full liberalisation. Authorities have increasingly engaged with major global exchanges and explored use cases such as blockchain-based settlement and stablecoin-linked payments. However, the regulatory approach remains cautious, prioritising oversight and financial stability.

By enabling regulated access while restricting direct exposure, Pakistan is positioning itself within a growing group of emerging markets adopting a “controlled participation” model for digital assets—allowing industry development, but within tightly defined boundaries.