In a landmark regulatory shift, the State Bank of Pakistan has formally withdrawn its long-standing restriction on virtual currencies, signaling a decisive move toward regulated cryptocurrency adoption in Pakistan.
The central bank has repealed its earlier prohibition issued under BPD Circular No. 3 of April 2018, which had barred banks and financial institutions from dealing in virtual currencies and digital tokens.
Replacing it, the SBP has issued BPD Circular No. 10 of 2026, laying the groundwork for a regulated digital asset ecosystem within the country’s formal financial system.
Banks cleared to support licensed crypto businesses
Under the revised policy, banks and financial institutions are now permitted to open and maintain accounts for Virtual Asset Service Providers. However, this access is conditional. Only crypto firms licensed by the Pakistan Virtual Asset Regulatory Authority will be allowed to operate through the banking channel, ensuring regulatory oversight, compliance, and transparency.
This development removes a major barrier that had kept Pakistan’s crypto activity largely informal, despite growing public interest and global adoption of digital assets.
Virtual Asset Act 2026 provides legal foundation
The policy shift coincides with the enforcement of the Virtual Asset Act 2026, which has now come into effect nationwide. Authorities have confirmed that PVARA is fully operational and tasked with supervising cryptocurrencies, digital tokens, exchanges, and related financial services.
Experts say the introduction of a formal legal framework marks a turning point for Pakistan’s digital finance landscape. By recognizing and regulating crypto assets, the country aims to bring innovation into the mainstream while addressing risks related to money laundering and consumer protection.
Economic impact and future outlook
Financial analysts believe that regulating crypto in Pakistan could help channel billions of dollars’ worth of digital assets held by overseas Pakistanis into the documented economy. The move is also seen as a confidence-building step for fintech startups and international investors looking at Pakistan’s digital economy.
Market observers further expect the State Bank of Pakistan to explore the launch of a central bank digital currency in the future, aligning Pakistan with global trends in digital banking and monetary modernization.
Overall, the decision reflects a broader effort by Pakistani authorities to modernize the financial system, encourage innovation, and integrate cryptocurrency regulation with international best practices—marking the beginning of a new chapter for crypto and digital assets in Pakistan.
