Pakistan has taken a decisive step toward formalizing its virtual-asset market by ending the central bank’s eight-year prohibition on banking services for the crypto sector. Under a policy change issued on April 14, 2026, financial institutions may now open PKR-denominated accounts for licensed Virtual Asset Service Providers, giving the industry its first structured route into the country’s regulated banking system.
The move follows the passage of the Virtual Assets Act 2026 and the establishment of the Pakistan Virtual Assets Regulatory Authority, which will license and supervise the sector. Together, those changes signal a clear policy direction: virtual assets are being brought inside the formal financial perimeter, but only through a tightly controlled, licence-first framework.
Access to Banking, but Not to Bank Balance Sheets
The new arrangement gives licensed VASPs access to segregated, non-interest-bearing PKR accounts that must be maintained separately from company operating funds. These are designated as client-money accounts, which means the structure is designed to support fiat settlement and custody rather than broader treasury flexibility. In practice, the state is allowing banking access without relaxing its control over how those funds can be used.
The restrictions are extensive. Banks may not allow those accounts to be used for cash deposits, cash withdrawals, collateral or credit. That sharply limits the role of the banking sector to payments infrastructure and fiat safekeeping, while preventing crypto firms from using the accounts as a bridge into leverage or broader balance-sheet activity. The result is a narrow but clearly defined operational channel for licensed firms.
The central bank has been equally clear about the limits on banks themselves. Financial institutions are still prohibited from investing in, trading or holding cryptocurrencies, whether on their own balance sheets or through customer deposits. That leaves banks in a support role rather than a market-facing one, ensuring that the integration of crypto into finance stops well short of direct bank exposure to digital assets.
Regulation Comes With Commercial Ambition
Even within that cautious structure, Pakistan is signaling that it wants to build a legitimate virtual-asset market. Authorities have already disclosed memoranda of understanding with Binance to explore tokenization projects valued at up to $2 billion, while Binance and HTX have received early clearances for licensing. Discussions are also under way with an affiliate of World Liberty Financial around stablecoin-based cross-border payment solutions, suggesting the government is pairing regulatory discipline with selective commercial engagement.
PVARA will sit at the center of that model. The authority is expected to oversee licensing, compliance and innovation across exchanges, wallets and other VASP categories, while banks will be required to carry out enhanced due diligence, verify licences, keep risk profiles current and monitor transactions on an ongoing basis. Suspicious activity must still be reported to Pakistan’s Financial Monitoring Unit, reinforcing that AML and counter-terror finance controls remain the operational backbone of the new regime.
The enforcement side is equally firm. Unlicensed crypto activity can trigger fines of up to PKR 50 million, or about $179,000, as well as prison terms of up to five years. At the same time, private retail trading in cryptocurrencies remains restricted until separate regulations are finalized, which makes clear that market access is being expanded selectively, not opened all at once.
The broader effect is to create a more credible fiat pathway for licensed operators while preserving strong limits on what banks can do. That should help reduce reliance on informal dollar channels and improve on-ramp conditions for institutional flows, but it will not yet create a full-service crypto banking market. Persistent constraints around direct bank participation, token custody and data-governance alignment mean Pakistan is building a controlled gateway, not a fully liberalized crypto-financial ecosystem.