Pakistan Ends Crypto Banking Ban, Opens Doors for Licensed Firms

Pakistan lifts crypto banking ban, allowing licensed firms access to banks under strict rules to ensure safety, transparency, and compliance.

Pakistan has taken a major step toward regulating digital assets. According to Reuters, the State Bank of Pakistan has removed its crypto banking ban of 2018. Furthermore, the shift enables licensed crypto companies to obtain banking services. Therefore, the relocation is an indication of a transition to a more organized financial system.

Pakistan Introduces Regulated Crypto Banking Framework

On April 14, the central bank released BPRD Circular Letter No. 10. This new regulation supersedes the previous one that prevented banks from engaging in crypto transactions. Banks are now able to open accounts of licensed Virtual Asset Service Providers. Pakistan Virtual Asset Regulatory Authority has to approve these firms.

Related Reading: Pakistan Passes Virtual Assets Act to Regulate Crypto Industry | Live Bitcoin News

This measure, according to officials, helps to formalize the adoption of digital assets. Bilal bin Saqib claimed that it introduces crypto to the Pakistani financial system. Thus, the nation is heading towards safer and more transparent crypto usage. Moreover, the framework fosters trust between investors and institutions.

Banks are required to adhere to stringent requirements before onboarding firms. They must confirm each company’s PVARA license. Moreover, banks are required to have different client accounts in Pakistani rupees. These accounts should not be interest-bearing as they should be controlled.

Notably, banks are yet to invest in crypto assets. They are also not allowed to hold digital assets using customer funds. Thus, the system maintains the separation of traditional banking and crypto risks. Meanwhile, it allows simple access to finances by licensed firms.

New Rules Add Strong Safeguards for Crypto Operations

The new framework comes under the Virtual Assets Act 2026. This law established PVARA as the main regulatory authority. This means that every crypto company will have to work under its control. This will guarantee improved surveillance and adherence within the industry.

Banks are now able to establish special client money accounts to VASPs. There are a number of limitations on these accounts. As an example, there are no cash deposits or withdrawals. Also, loans or collateral cannot be made using these accounts.

The other important rule is against mixing of funds. The VASP funds and customer funds should never be mixed. Thus, this minimizes the chances of abuse or misunderstanding. In addition, banks need to revise their risk systems regarding crypto-related operations.

Anti-money laundering laws also mandate them to report suspicious transactions. This brings crypto operations in line with the current financial protection. Consequently, law enforcement is able to track down criminal activities.

Previously, Pakistan had a strict stance on crypto banking. However, the global trends have promoted a more balanced approach. Regulated crypto access has become the norm in many countries rather than outright bans. Thus, Pakistan is moving towards international standards.

This shift is also in the wake of an increasing crypto market in the country. Last year, it was estimated to have a market size of $21 billion. However, the new rules aim to ensure that growth happens safely.

To sum up, Pakistan’s move is a milestone for the country’s crypto industry. The new system provides access and has tight control. It can therefore be more appealing to investment and innovation. Meanwhile, robust security measures will ensure the safety of users and the financial system.