The State Bank of Pakistan (SBP) issued BPRD Circular Letter No. 10 of 2026 on April 14, formally permitting banks, development finance institutions, microfinance banks, and payment operators to provide banking services to virtual asset service providers (VASPs) that hold a valid license from the Pakistan Virtual Assets Regulatory Authority (PVARA). The circular took effect immediately and directly supersedes BPRD Circular No. 03 of 2018, issued April 6, 2018, which had instructed the same institutions to avoid any dealings in virtual currencies and to flag related transactions as suspicious to the Financial Monitoring Unit.

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What the New Rules Actually Allow

Banking access under the circular comes with significant structural conditions. Banks must verify a VASP's license directly with PVARA before opening any account, and they are required to keep a copy of the license on file. Customer funds must be held in segregated Client Money Accounts (CMAs), denominated in Pakistani rupees and paying no interest. VASP operating funds cannot be mixed with client funds held in these accounts.

The rules also draw a hard line around cash. Cash deposits and withdrawals are prohibited in CMAs, and the accounts cannot be used as collateral or security for financing.

Banks themselves are barred from investing, trading, or holding virtual assets using either their own capital or customer deposits.

For firms that have received a PVARA No Objection Certificate but have not yet completed the full five-stage licensing process, the circular creates a limited-purpose account that unlocks full transactional services only once a final license is issued.

The SBP circular states directly: "REs shall not invest, trade or hold virtual assets using their own funds or customer deposits."

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Eight Years in the Making

The 2018 circular that the new rules replace was explicit in its skepticism. The SBP at the time described virtual currencies as carrying a high degree of anonymity that could facilitate illegal activity, and noted that no legal protection existed for users who suffered losses.

That directive effectively closed Pakistan's formal financial system to any crypto-adjacent business, even as informal activity persisted.

The reversal reflects a policy shift that accelerated sharply between 2025 and early 2026. The Pakistan Crypto Council was established in March 2025 to coordinate digital asset policy across the SBP, the Securities and Exchange Commission of Pakistan (SECP), and other ministries.

PVARA was created via presidential ordinance in July 2025 and became a statutory federal authority in March 2026 when the Virtual Assets Act, 2026 completed its full legislative passage through both chambers of parliament and received presidential assent.

PVARA issued No Objection Certificates to Binance and HTX in December 2025, placing both exchanges at the front of the licensing queue. HTX was among the first to formally begin Pakistan's five-stage licensing process.

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Why the Timing Matters: IMF and FATF Pressure

The policy shift did not happen in isolation. The Virtual Assets Act was linked to Pakistan's ongoing IMF economic stabilisation programme, with regulatory development in this area forming part of the broader reform agenda attached to that engagement.

On the financial crime front, FATF (the global anti-money laundering standards body) publicly called out Pakistan in June 2024 for failing to regulate or prohibit virtual assets in line with Recommendation 15, which requires jurisdictions to apply AML/CFT standards to VASPs equivalent to those applied to banks.

Pakistan exited the FATF grey list in October 2022 after years of reform efforts, and maintaining that status appears to have been a clear design constraint for the SBP's new account rules. The prohibition on cash transactions and the mandatory license verification requirement are structurally aligned with FATF's compliance expectations.

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Regional Stakes: Remittances and the India Contrast

The practical significance of this circular is concentrated in one use case: remittances. Pakistan receives more than $30 billion in annual remittance inflows, with an estimated 10 million overseas Pakistanis sending money home primarily from Gulf states, the United Kingdom, and the United States. Traditional remittance channels carry average fees of around 7% per transaction; projections from ISSRA (the Institute for Strategic Studies, Research and Analysis), a Pakistani policy research body, suggest regulated crypto corridors could bring that cost below 2%. Indicative estimates from Pakistani policy research also put annual crypto remittance volumes at approximately $10.5 billion, representing a substantial share of combined official and informal flows, though that figure remains subject to primary source confirmation.

Chainalysis ranked Pakistan third globally in its 2025 Crypto Adoption Index, behind only India and the United States, reflecting widespread grassroots engagement with digital assets across the country.

The comparison with India is instructive. India taxes crypto gains at a flat 30% and applies a 1% levy on transactions, but has no comprehensive licensing law and no formal banking access framework for exchanges. The effect has been to push activity offshore. Pakistan is now moving in a different direction, actively building regulated infrastructure for exchange operators.

Pakistani officials have benchmarked these ambitions explicitly against Dubai and Singapore as established crypto hubs. The framework also carries a dimension with few international parallels: PVARA's licensing process requires applicants to obtain guidance from a committee of Islamic finance scholars, embedding a Sharia-compliance review into the pathway to market entry. That requirement has direct implications for Pakistan's positioning as a potential centre for Islamic-compliant digital finance across Muslim-majority populations in South and Central Asia, a market no comparable regulatory jurisdiction has yet addressed in this way.

One friction point remains unresolved. The CMA framework is PKR-denominated and non-interest-bearing, meaning it does not create a direct bank account pathway for settling stablecoin transactions in USDT or USDC. Cross-border flows using dollar-pegged tokens still face structural constraints under the current rules.

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What Comes Next

Binance and HTX, both holding PVARA NOCs from December 2025, are the most advanced in the licensing pipeline and would likely be among the first to operationalise PKR bank accounts under the new framework. PVARA targets a 60-calendar-day decision window from a complete license application, though the five-stage process includes AML registration with the Financial Monitoring Unit and local incorporation requirements that add time.

International exchanges considering Pakistan entry should note a structural prerequisite built into the PVARA framework: applicants must be recognised as operating in a major jurisdiction, specifically the United States, the European Union, or Singapore. Both Binance and HTX satisfy this threshold, but the requirement effectively limits eligibility to firms with an established international compliance footprint.

Pakistan's regulatory sandbox, launched in February 2026, remains open for Web3 companies that want to test products before committing to full licensing.

For commercial banks, the circular creates a new operational obligation: building VASP-specific risk profiles, updating KYC documentation processes, and training compliance staff on a category of customer they have been barred from serving for nearly a decade. The stakes for non-compliant operators are equally clear: the Virtual Assets Act 2026 provides for penalties of up to Rs. 50 million plus possible imprisonment for anyone conducting unlicensed virtual asset activity.