Pakistan has taken a significant step toward regulating its digital asset space by allowing licensed virtual asset service providers (VASPs) to access formal banking channels. The decision by the State Bank of Pakistan marks a clear departure from its earlier stance in 2018, when financial institutions were effectively barred from dealing with crypto-related businesses.
This shift comes after the introduction of the Virtual Assets Act, 2026, which provides a legal framework for supervising and regulating companies operating in the crypto and blockchain space. With this foundation now in place, authorities are aiming to gradually integrate virtual assets into the country’s mainstream financial system—without compromising on oversight.
Under the new rules, only companies that are officially licensed will be able to open bank accounts. Financial institutions are required to verify approvals issued by the Pakistan Virtual Assets Regulatory Authority (PVARA) before onboarding any VASP. This ensures that only legitimate and compliant players gain access to the banking system.
To strengthen financial discipline, banks must keep client funds in separate, non-interest-bearing accounts denominated in Pakistani rupees. This separation is intended to protect customer assets and maintain clarity between operational funds and client holdings.
Even with this opening, regulators are taking a cautious approach. Banks will remain fully responsible for conducting background checks, evaluating risks, and monitoring transactions. Any suspicious activity must be reported in line with anti-money laundering and counter-terrorism financing requirements.
Importantly, the central bank has set firm limits on the role of financial institutions. Banks are not permitted to buy, hold, or invest in virtual assets themselves. Their role is strictly limited to providing services, rather than participating in the crypto market.
At the same time, Pakistan is showing interest in collaborating with international crypto firms. Agreements and discussions with global platforms suggest that the country is exploring opportunities such as asset tokenization and more efficient cross-border payment systems powered by blockchain technology.
This policy change could have far-reaching implications. It offers legitimacy to crypto businesses, improves transparency in financial flows, and may attract foreign investment into Pakistan’s emerging digital economy. However, the strict compliance requirements mean that only well-structured and properly regulated firms are likely to benefit.
In essence, Pakistan is attempting to strike a balance—opening the door to innovation while keeping strong safeguards in place. The move signals a gradual but meaningful shift toward embracing the future of finance in a controlled and responsible manner.