Pakistan allows banks to open accounts for licensed VASPs, ending 2018 ban

The State Bank of Pakistan has effectively lifted a seven-year restriction on banking access for crypto firms, replacing a 2018 circular that barred regulated entities from dealing in virtual assets.

The directive, issued with immediate effect, authorizes banks, microfinance banks, and payment system operators to open accounts for entities holding a valid license from the Pakistan Virtual Asset Regulatory Authority. 

SBP Director Syed Mansoor Ali said the directive replaces a circular issued in April 2018, which prohibited processing, using, trading, holding, or transferring value in virtual currencies, including bitcoin and litecoin. 

Under the updated rules, banks may open accounts for entities holding a valid PVARA license or a No Objection Certificate during the licensing process. The central bank requires regulated entities to obtain and independently verify licenses before onboarding, while maintaining enhanced customer due diligence under Anti-Money Laundering, Combating the Financing of Terrorism, and Countering Proliferation Financing regulations. 

The circular instructs banks to establish segregated Client Money Accounts denominated in Pakistani rupees for settlement of authorized VASP transactions. These accounts must remain non-remunerative, prohibit cash deposits and withdrawals, and cannot be used as collateral or security for financing. 

The rules further bar commingling of client funds with VASP operational balances and prohibit banks from investing, trading, or holding virtual assets using proprietary funds or customer deposits.

Banks must also revise customer risk profiling models to account for VASP exposure and apply ongoing monitoring and suspicious transaction reporting to the Financial Monitoring Unit, Ali said in the circular. 

The central bank’s pivot follows the passage of the Virtual Assets Act, 2026, by Pakistan’s parliament on March 6, which established PVARA as a statutory body. The Act introduced criminal penalties for unlicensed operations, including fines of up to PKR 50 million ($179,000) and prison terms of up to five years.