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The State Bank of Pakistan has authorized commercial banks to open accounts for licensed virtual asset service providers (VASP). The central bank has lifted the ban imposed on April 6, 2018, which required financial institutions to refrain from processing transactions related to digital assets.
Under the new Virtual Assets Act of 2026, the Pakistan Virtual Asset Regulatory Authority (PVARA) will be responsible for crypto licensing and oversight. Banks and other financial institutions are now permitted to serve VASPs that hold a PVARA license, although they must verify its authenticity.
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Banks will be required to establish separate accounts for VASPs and their clients’ funds, as mixing the funds of crypto providers with user money is strictly prohibited. Client Money Accounts (CMA) must be denominated in Pakistani Rupees (PKR) and should not accrue interest. Deposits and withdrawals from CMA accounts are not allowed. Funds held in CMA should not be utilized as collateral for financing or lending to crypto service providers.
In addition to standard customer due diligence requirements and compliance with anti-money laundering and counter-terrorism financing regulations, banks must conduct enhanced scrutiny of the VASP’s business model, client base, operational scope, and geographical presence. They are also required to update risk assessment systems, monitor suspicious transactions, and report them to the Financial Monitoring Unit (FMU).
Banks may also open limited-purpose accounts for organizations that have received prior approval from PVARA for cryptocurrency activities in Pakistan. However, these organizations are entitled to provide the full range of banking services only after obtaining a PVARA license.
Since March, Pakistan has introduced criminal liability for crypto entrepreneurs operating illegally within the country. Those working without a license face hefty fines or imprisonment for up to five years.
