The State Bank of Pakistan (SBP) has removed an 8-year ban on Virtual Asset Service Providers (VASPs) to open formal bank accounts. This is a significant step taken by Pakistan in an effort to formalize its digital asset ecosystem. The State Bank authorized financial institutions to open accounts for licensed Virtual Asset Services Providers, marking a major policy shift.
New Legal Framework
This decision follows the recent enactment of the Virtual Assets Act 2026, which established a legal framework for digital assets and introduced oversight through the Pakistan Virtual Assets Regulatory Authority (PVARA). The new law effectively changes the restrictive regime that had been in place since 2018.
Despite the relaxation, the SBP has imposed strict safeguards. Banks are prohibited from trading, holding, or investing in cryptocurrencies using their own customers’ funds. Instead, their role is limited to facilitating services for licensed providers. To protect users, the SBP has mandated the use of segregated Client Money Accounts (CMAs), ensuring customer funds remain separate from the operational capital.
Additionally, financial institutions must comply with stringent anti-money laundering and foreign exchange regulations. Banks are required to conduct thorough due diligence, verify PVARA licensing, and maintain continuous monitoring of VASP activities. Any suspicious transactions must be reported to the Financial Monitoring Unit.
The policy shift is expected to attract regulated crypto platforms and unlock opportunities in blockchain innovation, including the potential use of stablecoins for cross-border payments in a market with millions of users.
