Pakistan opens banking to crypto firms after 8-year ban

Pakistan’s central bank lifted its 8-year ban on crypto-related banking on April 15, 2026, opening financial services to licensed digital asset firms under a strict new regulatory framework.

"This is a landmark decision that brings Pakistan's digital asset industry out of the grey zone and into a formal, regulated environment," said Ali Khan, a partner at a Karachi-based fintech law firm, in a note to clients. "For the first time, licensed firms will have a clear path to banking, which is a critical step for growth."

The new regulations, issued by the State Bank of Pakistan, reverse a 2018 circular that had prohibited all regulated financial institutions from dealing with cryptocurrency exchanges and service providers. Under the new rules, licensed Virtual Asset Service Providers (VASPs) can now open accounts with Pakistani banks. However, the regulations explicitly maintain a prohibition on banks themselves holding or trading cryptocurrencies on their own balance sheets.

The move could unlock significant investment and innovation in a market of over 240 million people, potentially positioning Pakistan as a new crypto hub in the region. The framework follows a path similar to the United Arab Emirates by allowing regulated private sector activity, while stopping short of the full embrace seen in El Salvador. The next key milestone will be the release of the full VASP licensing framework, expected in the third quarter of 2026.

The policy shift marks a significant reversal from the State Bank of Pakistan's previous stance, which had cited concerns over money laundering and terrorism financing as reasons for the original ban. The new framework aims to address these risks by imposing stringent licensing and reporting requirements on all participating crypto firms.

Industry participants expect the decision to trigger a wave of new business formation and attract foreign investment. Before the ban, Pakistan was considered one of the fastest-growing crypto markets globally, according to data from Chainalysis. The renewed access to banking is seen as the primary catalyst needed to revive that growth, enabling firms to more easily manage payroll, operational expenses, and client fund segregation.

This article is for informational purposes only and does not constitute investment advice.