Pakistan's State Bank of Pakistan (SBP) has reversed its eight-year ban on banks processing cryptocurrency transactions, marking a dramatic policy shift for a nation with over 20 million crypto users. Issued on 14 April 2026, the Circular Letter allows licensed virtual asset service providers (VASPs) to access the formal banking system under strict regulatory oversight.
Speaking to media on 15 April 20206, Bilal bin Saqib, the Chairman of the Pakistan Virtual Assets Regulatory Authority said, "This is a foundational step in bringing virtual assets into the formal financial system of Pakistan."
The move dismantles SBP's April 2018 circular, which categorically prohibited financial institutions from processing, trading, or holding virtual currencies such as Bitcoin. Transactions involving crypto were previously flagged as suspicious and reported to Pakistan's Financial Monitoring Unit (FMU).
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New Framework Under Virtual Assets Act 2026
The reversal comes alongside the Virtual Assets Act 2026, which establishes the Pakistan Virtual Assets Regulatory Authority (PVARA) to license and supervise VASPs. Licensed providers can now open PKR-denominated, non-interest-bearing bank accounts, though significant restrictions apply.
Banks must implement enhanced due diligence on VASP business models, customer bases, operations, and geographic reach. Cash deposits and withdrawals are prohibited, accounts cannot serve as collateral, and all activity requires continuous anti-money laundering (AML) and counter-terrorism financing (CFT) monitoring with regular FMU reporting.
From Underground to Regulated Markets
Despite the 2018 ban, Pakistan emerged as a global leader in crypto adoption. Peer-to-peer trading on platforms like Binance flourished, as users sought to hedge against volatility in the Pakistani rupee. Notably, the currency depreciated 20% against the US dollar in 2025. Crypto now facilitates remittances from the country's large overseas workforce.
The informal market reached an estimated $10-15 billion in annual volume. Following the April 14 circular, Binance peer-to-peer volumes for PKR stablecoin pairs increased by 25%, while Bitcoin-PKR trading pairs gained 10-15% intraday.
Bilal bin Saqib, CEO of a local crypto firm, stated Pakistan is "set to legalise cryptocurrency trading, joining a growing list of nations embracing digital assets."
Economic Impact and Market Outlook
The regulatory shift could legitimize Pakistan's substantial informal crypto economy and improve market efficiency. Peer-to-peer premiums, which historically ran 5-10% above spot rates, are expected to decrease as fiat on-ramps and off-ramps become streamlined through regulated channels.
With annual remittances valued at $30 billion, industry observers estimate 5-10% could shift to crypto channels, potentially easing foreign exchange pressures. PVARA's regulatory sandboxes and virtual asset zones may attract an estimated $500 million in VASP investments, positioning Pakistan competitively within South Asia's digital asset landscape.
The structured approach reflects lessons from Pakistan's history on the Financial Action Task Force (FATF) grey list, prioritizing AML/CFT compliance while enabling innovation. As PVARA begins licensing operations and banks onboard compliant VASPs, Pakistan's regulated crypto market could see substantial growth in 2026-2027, transforming an estimated 20 million users into participants in a fully supervised digital asset ecosystem.