KARACHI – Pakistan allowed banks to offer services to crypto sector, but only in limited role. All commercial banks can provide services to licensed crypto businesses under strict regulation, while still being completely barred from trading, investing in, or holding any digital assets, keeping full separation between traditional banking and crypto exposure.
The development come as Pakistan officially lifted its seven-year ban restricting banks from serving crypto-related businesses, ushering in a tightly controlled, licensing-driven era for virtual assets.
As per State Bank’s directives, banks and financial institutions can provide services to Virtual Asset Service Providers (VASPs), but only if they are licensed under the newly established Pakistan Virtual Asset Regulatory Authority (PVARA). The move replaces the sweeping 2018 prohibition that completely blocked crypto-related banking activity.
Under the new regime, banks are now permitted to open and maintain accounts for VASPs that are either already licensed or in the process of seeking approval from PVARA. However, access comes with heavy regulatory strings attached.
Financial institutions must enforce strict anti–money laundering (AML), know-your-customer (KYC), and counter-terrorism financing controls. They are required to independently verify VASP licenses with PVARA, conduct enhanced due diligence before onboarding, and continuously monitor transactions for suspicious activity.
Despite reopening the banking channel, the SBP has drawn a hard line, as banks themselves are strictly forbidden from engaging in crypto markets. They cannot trade, invest in, or hold digital assets under any circumstances—whether using their own funds or customer deposits.
A key feature of the overhaul is the introduction of Client Money Accounts (CMAs), designed specifically for VASPs. These accounts must be denominated in Pakistani rupees and are strictly non-interest-bearing.
Client Money Accounts are limited to processing authorized transactions only. Cash deposits and withdrawals are not permitted, and funds cannot be used as collateral or for any form of lending or credit. Banks must also ensure complete segregation of VASP funds from customer assets to prevent any commingling.
Banks are also required to upgrade their internal risk systems to properly evaluate VASP-related risks. This includes modifying customer risk profiling models, applying risk-based monitoring frameworks, and maintaining ongoing oversight of all VASP relationships. Any suspicious transactions must be reported to the Financial Monitoring Unit in accordance with Pakistan’s anti–money laundering laws.
Even entities that have not yet secured full licensing may be granted limited-purpose bank accounts to complete regulatory formalities. However, full banking services, including transactional capabilities linked to virtual assets, will only be permitted once PVARA issues an official license.
The policy is a decisive transition from outright prohibition to controlled integration. While Pakistan is now opening its banking system to the crypto industry, it is doing so under one of the strictest compliance frameworks, ensuring banks remain completely barred from direct exposure to digital assets.
