Pakistan’s central bank has reversed the 2018 ban on cryptocurrency banking, allowing regulated banks to open accounts for licensed virtual asset service providers under the new Virtual Assets Act 2026.

Banks must conduct due diligence on VASP licenses with PVARA and maintain segregated, nonremunerative, rupee-denominated client accounts that are non-cashable.

The move aligns Pakistan’s financial framework with fresh licensing and compliance regimes for virtual assets, creating a more transparent and auditable environment.

Officials frame the shift as strengthening regulation and boosting investor confidence, reflecting a global trend toward greater crypto acceptance.

Efforts are underway to explore blockchain-based financial infrastructure and the potential use of stablecoins for cross-border payments, in collaboration with a World Liberty Financial affiliate.

Licenses must be obtained and independently verified before onboarding, with firms adhering to enhanced AML, CTF, and CPF due diligence.

The framework centers on strict AML/CFT controls to oversee virtual asset activities.

Licensing requirements and clear banking guidelines aim to create a transparent, auditable structure for crypto-related firms.

Banks must update customer risk profiling for VASP exposure, implement ongoing monitoring, and report suspicious activity to the Financial Monitoring Unit.

Entities must perform full due diligence on each VASP, risk-rate VASPs, and maintain ongoing risk assessment of onboarding, business models, and geographic exposure.

Ongoing monitoring and suspicious transaction reporting to the FMU are mandatory, including evaluation of VASPs’ models and activities.

The move positions Pakistan within global Bitcoin adoption trends and could influence near-term regulatory and market dynamics.