Islamabad, April 15, 2026. The State Bank of Pakistan issued BPRD Circular Letter No. 10 of 2026 on April 14, formally ending a ban on banking services for cryptocurrency businesses, a prohibition that had been in place since 2018. Under the new rules, regulated banks, microfinance institutions, and payment service providers may now open accounts for any virtual asset service provider (VASP) that holds a valid licence from the Pakistan Virtual Asset Regulatory Authority (PVARA). The move follows Parliament's passage of the Virtual Assets Act, 2026, in March 2026, which converted PVARA from a temporary presidential instrument into a permanent, independent statutory regulator with judicial-grade enforcement powers. That legislative step provided the formal basis for the SBP to issue this circular.

PVARA Chairman Bilal bin Saqib called the central bank's circular "a foundational step in bringing virtual assets into the formal financial system of Pakistan," according to the Express Tribune. His framing reflects a shift that has been years in the making: Pakistan was added to the Financial Action Task Force (FATF) enhanced monitoring list in June 2018, the same year the crypto ban was introduced, and only exited that list in October 2022 after completing all 34 required anti-money laundering, counter-terror financing, and counter-proliferation financing reform action items. The regulatory architecture announced this week is designed in part to demonstrate that Pakistan can supervise digital asset activity without creating AML/CFT/CPF vulnerabilities.

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What the circular actually requires

The SBP's framework is tightly bounded. Banks must open what the circular calls Client Money Accounts (CMAs), which are segregated, rupee-denominated, non-interest-bearing accounts for each licensed VASP. Cash deposits and withdrawals are prohibited. CMA funds cannot be pledged as collateral for loans or financing. Crucially, banks are expressly forbidden from investing in, trading, or holding virtual assets using their own capital or customer deposits. The bank's role under this framework is infrastructure only: it provides account access, not market exposure. Before onboarding any VASP, banks must verify that the firm holds a current PVARA licence.

The enhanced compliance obligations are substantial. Banks must assess the nature, scale, and geographic scope of a VASP's business, revise their risk models to account for virtual asset-specific risks, and report suspicious transactions to Pakistan's Financial Monitoring Unit.

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How this fits into a broader regulatory buildout

PVARA was established by presidential ordinance in July 2025 and subsequently began a staged approach to market entry. On December 12, 2025, it issued No Objection Certificates to Binance and HTX, allowing both exchanges to register on Pakistan's AML system, establish local subsidiaries, and begin full licence applications. Bin Saqib said in remarks to Dawn that these certificates were "not blanket approvals" but rather "the first step under a supervised entry framework." The authority launched a regulatory sandbox on February 20, 2026, giving Web3 developers a monitored environment in which to test products before seeking full commercial licences. Separately, Pakistan signed a memorandum of understanding with Binance to explore tokenising up to $2 billion in sovereign bonds, treasury bills, and commodity reserves.

The Virtual Assets Act, 2026 provides the enforcement teeth. Penalties include fines of up to PKR 50 million (roughly $180,000 at current exchange rates), imprisonment, and licence revocation for unlicensed operation, market manipulation, insider trading, and the issuance of unsecured algorithmic stablecoins. Existing VASPs have six months from the Act's enactment to obtain a PVARA licence or cease operations.

A notable design feature of the framework, given Pakistan's constitutional context, is its Sharia compliance requirement. All licensed VASPs must adhere to Islamic finance standards, overseen by a committee of Islamic scholars. This requirement is directly relevant to Gulf-region institutional investors and to any firm structuring products for Pakistan's predominantly Muslim population.

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What this means for Pakistani users and the region

Pakistan ranks third globally in crypto adoption by user count, behind only the United States and India, according to data from Chainalysis and Sumsub. Separate estimates from MEXC Blog and Sumsub put the number of active Pakistani users at between 27 million and 40 million. Millions of those users have accessed crypto through peer-to-peer platforms, VPNs, and decentralised exchanges, entirely outside the formal banking system. The SBP circular does not directly change retail access rights, but it builds the fiat infrastructure that licensed exchanges will need to offer rupee-denominated on-ramps and off-ramps.

The remittance use case may be the most economically significant near-term application. Pakistan receives more than $30 billion annually from overseas workers, primarily from the Gulf, the United Kingdom, and North America. Traditional transfer services typically charge fees in the range of 5 to 7 percent per transaction. Licensed, stablecoin-based remittance corridors could bring that cost below 2 percent.

Regionally, the move positions Pakistan ahead of India, which imposes a flat 30 percent capital gains tax on crypto profits and has no equivalent banking-access framework for exchanges. Bangladesh and Sri Lanka remain restrictive. There are structural limits to acknowledge: rupee-only CMAs constrain cross-border settlement; PVARA licensing is structured in a way that advantages firms already holding regulatory recognition from major jurisdictions such as the United States, the European Union, and Singapore, giving large incumbents like Binance a built-in edge over smaller domestic startups; and banks are prohibited from offering crypto investment products, ETFs, or custody services on their own balance sheets, which limits broader institutional engagement with the asset class.

The first real indicator of whether this framework succeeds in practice will be how quickly PVARA-licensed exchanges begin processing rupee deposits and what happens to peer-to-peer trading volume on informal platforms as formal alternatives become available. FATF continues to monitor Pakistan's AML/CFT/CPF progress, and the stakes are sharply defined: FATF has explicitly warned Pakistan that removal from the Grey List does not confer immunity from future scrutiny, with domestic terror-financing via digital wallets identified as a specific ongoing risk. The credibility of this regulatory opening depends on enforcement holding up under real market conditions.