Crypto Regulation: Pakistan Eases Rules, Grants Banking Access to VASPs

Key Insights:

• Pakistan’s new crypto regulation allows banks to onboard licensed digital asset firms.
• 2018 crypto ban revised with strict compliance and an AML framework.
• The Virtual Assets Act of 2026 lays the foundation for regulated crypto banking.

Pakistan has taken a major step in the crypto regulation space, bringing digital assets into the country’s banking system. The central bank has effectively revised the 2018 restrictions, now allowing banks to open crypto accounts.

The move comes after the introduction of the Virtual Assets Act, 2026. This signals Pakistan’s effort to regulate digital assets under strict compliance and anti–money laundering rules. The country is also planning to integrate the crypto industry gradually into mainstream banking.

2018 Ban Revised in Pakistan Crypto Regulation

According to today’s Reuters report, Pakistan’s central bank has allowed banks to open accounts for licensed virtual asset service providers (VASPs). With this crypto regulation move, the bank has revised its 2018 ban on digital assets. This marks a significant shift as the country begins integrating digital assets into its formal financial system.

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

Under the new crypto regulation, banks will also be under stricter rules to incorporate digital asset trading. The banks will have to follow strict checks before working with crypto-related companies.

They must first verify licenses issued by the newly formed Pakistan Virtual Assets Regulatory Authority before onboarding any firm. Once approved, banks are required to keep customer funds in separate, non-interest-bearing accounts in Pakistani rupees.

Pakistan Crypto Regulation News | Source: X

The State Bank of Pakistan has also made it clear that banks will remain fully responsible for monitoring these accounts. This includes conducting proper due diligence, assessing risk levels, and reporting any suspicious transactions to the authorities.

In addition, banks are not allowed to invest in or directly hold any virtual assets, either with their own money or customers’ funds. The rules are designed to ensure tighter control and reduce financial risks as crypto activity enters the regulated banking system.

Virtual Assets Act 2026 Sets the Foundation

It is worth noting that the Pakistan central bank’s decision to bridge the gap between banks and crypto companies comes amid the launch of the Virtual Assets Act, 2026. This crypto regulation bill provides the legal base for overseeing digital assets and their related activities in Pakistan.

With this crypto regulation law in place, Pakistan is now taking its first structured step toward formally including digital asset businesses within the traditional banking system.

The move shows a clear shift in policy. The country now brings digital assets under strict anti–money laundering and compliance rules. Under the new framework, only licensed firms will be allowed to operate. Also, banks will be required to carefully verify each company before offering services.

They must also carry out proper due diligence to ensure transparency and reduce financial risks. Overall, the goal is to create a controlled and secure environment for the growth of the crypto sector within the regulated financial system.

2018 Crypto Ban Pushed Activity Into Informal Channels

While Pakistan banned the use of crypto in the banking industry in 2018, most activity went outside the official banking system. It didn’t actually reduce the use of digital assets. Many people started using peer-to-peer (P2P) trading to buy and sell digital assets, bypassing regulated channels.

According to the Federation of Pakistan Chambers of Commerce and Industry, P2P crypto activity reportedly surged by more than 700% in the years that followed. As a result, most retail crypto transactions gradually shifted to informal networks. These include so-called “Digital Hundi” systems, by early 2024.

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