Pakistan has taken a decisive step toward the legalization and integration of digital assets into its financial system. The State Bank of Pakistan has officially lifted the ban, in effect since 2018, that prevented companies dealing with cryptocurrencies and other virtual assets from opening bank accounts.
This decision marks a turning point for a country that has long maintained a cautious, and at times openly restrained, stance toward the digital currency industry.
Earlier this year, the government announced the creation of a specialized regulator - the Pakistan Virtual Assets Regulatory Authority (PVARA). PVARA is now empowered to oversee the sector and issue licenses to market participants.
Despite the announcement of the licensing regime back in March, crypto firms could not legally use banking services due to an outdated central bank circular. That barrier has now been removed.
From now on, Pakistani banks are permitted to open accounts for crypto firms, but exclusively for those holding a valid license from PVARA. At the same time, financial institutions are subject to serious obligations:
· Due Diligence - Banks must thoroughly vet their new clients.
· Risk Assessment - Transaction analysis is required to ensure compliance with anti-money laundering (AML) and counter-terrorism financing (CFT) regulations.
· Reporting - All suspicious transactions must be promptly reported to the relevant supervisory authorities.
Islamabad's decision fits seamlessly into a broader Asian trend. Major financial hubs such as Hong Kong and Japan have already taken similar paths. These jurisdictions are actively competing for crypto-hub status by offering businesses transparent rules and a friendly banking infrastructure.
For Pakistan, which faces chronic liquidity shortages and capital outflows, attracting legitimate crypto business could address several challenges:
1. Expanding the tax base by bringing operations out of the shadows.
2. Attracting investment from international crypto exchanges and startups.
3. Protecting investor rights by creating a regulated environment, as opposed to the unregulated P2P market.
The new policy has already taken effect. However, experts warn that a mass opening of accounts should not be expected for at least a few more months. The main restraining factors will be the bureaucratic process of obtaining a PVARA license, as well as banks' efforts to develop internal regulations for handling these assets.