Pakistan Legalises Crypto, Opens Bank Accounts for Licensed Virtual Asset Firms
Pakistan's central bank formally activated the banking integration layer of the country's new virtual asset law on April 14, 2026, allowing licensed crypto firms to open segregated accounts at regulated banks for the first time in the country's history.
The State Bank of Pakistan (SBP) issued a circular authorising banks, development finance institutions, and microfinance banks to open what it calls Client Money Accounts (CMAs) for firms holding valid licences from the Pakistan Virtual Assets Regulatory Authority (PVARA). The move follows Parliament's passage of the Virtual Assets Act 2026, which cleared the Senate on February 27 and the National Assembly on March 3 before President Asif Ali Zardari signed it into law. Together, the legislation and the SBP circular mark the formal end of a crypto ban that dates back to April 2018.
"The act has been enacted, pursuant to which the Pakistan Virtual Assets Regulatory Authority (PVARA) has been established as the statutory authority responsible for the licensing, regulation, supervision and oversight of virtual asset activities in Pakistan," the SBP circular stated.
What the Banking Rules Actually Allow
The CMA framework is narrow by design. Accounts must be rupee-denominated, non-remunerative (meaning they carry no interest), and cannot be used as collateral.
Banks are forbidden from accepting cash directly into these accounts or allowing withdrawals in cash. Crucially, banks cannot trade or hold virtual assets using their own funds or customer deposits. Their role is limited to acting as payment infrastructure for licensed virtual asset service providers (VASPs), a category that under the new law covers eight business types: exchanges, wallet operators, token issuers, custodians, investment platforms, broker-dealers, advisory services, and derivative service providers.
Firms that received a No Objection Certificate (NOC) from PVARA while working toward a full licence can open more restricted accounts during that interim period. Binance and HTX both received NOCs in December 2025, becoming the first major global exchanges to enter Pakistan's formal licensing pipeline. Whether the April 14 circular retroactively covers NOC holders, or whether those entities must still await full licence issuance before accessing CMAs, has not been publicly clarified by the SBP or PVARA.
A conflict of interest warrants disclosure here. Changpeng Zhao (CZ), co-founder of Binance, was named a strategic adviser to the Pakistan Crypto Council in March 2025, while Binance simultaneously pursued a PVARA licence and signed a $2 billion government asset tokenisation agreement with Pakistan. That dual relationship runs through multiple aspects of the country's regulatory transition and should be weighed accordingly when evaluating Binance's prominent position in the process.
A Reversal Years in the Making
The policy shift is stark. In May 2023, Minister of State for Finance Aisha Ghaus Pasha told reporters, "They will never legalise [crypto]."
Three years later, the government has done exactly that.
The reversal was made possible largely by Pakistan's exit from the Financial Action Task Force (FATF) grey list in October 2022. Being on that list had made regulators reluctant to create any formal pathway for assets associated with money laundering risk. The justification for the ban weakened further in May 2023, seven months after the grey list exit, when FATF clarified that it had never actually required Pakistan to prohibit crypto outright.
The new framework aligns directly with FATF Recommendation 15 on virtual assets and Recommendation 16, which governs the Travel Rule requiring financial institutions to share sender and recipient information on transfers. Licensed VASPs are now classified as financial institutions under Pakistan's Anti-Money Laundering Act 2010, making full customer due diligence (CDD), enhanced due diligence (EDD) for higher-risk customer profiles, and suspicious transaction reporting mandatory.
The regulatory overhaul also fulfills a reform milestone under Pakistan's ongoing International Monetary Fund programme. The IMF arrangement represents a layer of external multilateral pressure that accelerated Pakistan's policy arc, a pattern also visible in Nigeria's recent regulatory reforms, illustrating how lending conditions are increasingly driving crypto formalisation across emerging markets.
Scale of the Market Being Formalised
Pakistan's informal crypto sector is substantial. Industry rankings, drawing on data from sources including Chainalysis and MEXC, place the country third globally for retail crypto activity.
User estimates vary widely, from roughly 20 million to 40 million active participants depending on the source and methodology. The gap reflects differing counting approaches across industry data providers, and adoption-rank data is generally considered more methodologically consistent than raw user-count figures.
Industry estimates of annual crypto transaction volume in Pakistan diverge considerably. Some figures, cited by sources including Coinpedia and Yahoo Finance, put the total at approximately $300 billion, while separate estimates place Pakistan-specific on-chain activity in 2025 at around $25 billion. The two figures likely reflect different scopes or measurement methodologies and have not been publicly reconciled.
The underlying drivers are structural. The Pakistani rupee lost 28% of its value in 2023 alone, pushing savers toward dollar-denominated digital assets as an inflation hedge. An estimated 100 million Pakistani adults lack access to formal banking services. Remittances run around $25 billion per year through formal channels, with traditional transfer fees typically between 5% and 7%. Stablecoin-based corridors, where available, can bring that cost below 1%, a difference that researchers estimate could return between $1.5 billion and $2 billion annually to Pakistani households if adopted at scale.
What Comes Next for Businesses and Users
Any business that was offering virtual asset services before the Act took effect has six months to apply for a PVARA licence or shut down. Operating without a licence carries fines of up to PKR 50 million (roughly $180,000 USD) and potential imprisonment of up to five years.
Developers and smaller projects face a significant structural barrier: PVARA's licensing criteria require applicants to already be recognised by regulators in the United States, European Union, or Singapore, a hard eligibility condition that could effectively exclude local startups with no prior international regulatory standing.
The Act also requires compliance with a Sharia review process overseen by Islamic finance scholars, a requirement that could force changes to any platform offering yield, lending, or certain derivatives products in the Pakistani market. This makes Pakistan's framework distinctive among emerging-market crypto regimes. The feature is shared with several Gulf state frameworks but is largely absent from African and South and Southeast Asian peer regimes, making it a notable design choice worth monitoring as the licensing process matures.
Pakistan's trajectory broadly mirrors moves by Nigeria and Kenya, both of which formalised VASP licensing frameworks in 2025. The regional picture also includes India, which has taken a markedly different approach: crypto is legal there but subject to a 30% capital gains tax and a 1% tax deducted at source, a combination that has significantly suppressed on-chain volume despite India's large user base. The contrast illustrates that the design of a regulatory framework matters as much as the decision to legalise.
The country has also signed an agreement with Binance to explore tokenising up to $2 billion in government assets and is developing a rupee-backed stablecoin. Pakistan has separately entered into an arrangement involving the USD1 stablecoin linked to World Liberty Financial (WLFI), a deal that carries notable geopolitical dimensions. Both initiatives intersect with the conflict-of-interest question raised above, given CZ's concurrent advisory role with the Pakistan Crypto Council while Binance pursues its own regulatory and commercial objectives in the country.
Whether those initiatives advance will depend on how quickly PVARA issues full licences and whether the banking infrastructure activated by Tuesday's SBP circular can support the transaction volumes an above-ground crypto market of this size would generate.