Pakistan's 7-Year Crypto Grounding Ends—Banks Can Handle the Keys, But Not the Coins

Pakistan's central bank has officially lifted its seven-year blanket ban on crypto services, finally letting banks and financial institutions serve licensed crypto firms under a fresh regulatory framework. After half a decade of regulatory limbo that would make even a JPEG floor look stable, the State Bank of Pakistan has decided that maybe, just maybe, banks can exist in the same ecosystem as Bitcoin without spontaneously combusting.

Under the new rules, banks can open accounts for virtual asset service providers approved by the Pakistan Virtual Asset Regulatory Authority (PVARA). But here's the catch: banks remain barred from trading, investing in, or holding crypto with their own funds or customer deposits. So financial institutions get to shake hands with the crypto industry—just don't expect them to actually hold any of the bags. They can manage the keys, but touching the coins? Absolutely not. It's like giving someone an invitation to a party but confiscating their shoes at the door.

The State Bank of Pakistan replaced its 2018 ban with rules requiring strict compliance with anti-money laundering (AML), know-your-customer (KYC), and counter-terrorism financing regulations. Onboarding crypto firms means mandatory license verification, enhanced due diligence, and ongoing transaction supervision. Translation: crypto firms wanting a bank account now have to jump through the same hoops as everyone else, just with extra paperwork and a side of regulatory scrutiny that would make even a compliance officer crack a smile. It's the financial system's way of saying, "We see you, behave yourselves."

The move follows the 2026 Virtual Assets Act and comes as Pakistan pursues plans for tokenized state assets, expanded Bitcoin mining, and a national stablecoin. The country isn't just opening the door to crypto—it's apparently planning to redecorate the entire house. Tokenized government bonds, a national stablecoin, and Bitcoin mining operations suggest Pakistan wants to become something between a crypto nation-state and a blockchain-powered economic experiment that would make even the most bullish analysts raise an eyebrow.

The country is already one of the world's largest retail crypto markets—roughly 40 million people, about 17% of the population, are involved in crypto trading, making it the third-largest by retail activity, ahead of Germany and Japan. Yes, you read that correctly. Forty million Pakistanis have