Pakistan Lifts 8-Year Crypto Ban, Opens $25B Market Under Sharia Rules

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Pakistan Ends Its Eight-Year Crypto Banking Ban on $25 Billion Market

Key Takeaways

  • State Bank of Pakistan ends 2018 ban, authorizes banks to open accounts for licensed VASPs.
  • Pakistan’s informal crypto market estimated at $21–$25 billion now has a regulated entry point.
  • Every licensed VASP requires a Sharia compliance board – unique globally.
  • Ministry of Finance signed Binance MOU to tokenize up to $2 billion in government assets.
  • Capital gains tax set at 15%, rising to 20% under IMF-backed fiscal reforms.

On April 14, 2026, the State Bank of Pakistan officially lifted its eight-year ban on banks providing services to cryptocurrency companies. Now, regulated banks can open accounts for companies dealing with virtual assets, as long as those companies are licensed by the Pakistan Virtual Assets Regulatory Authority. This change replaces a complete ban from 2018 with a new, organized system established by the Virtual Assets Act of 2026.

As an analyst, I’ve been reviewing the regulations around banks working with crypto firms, and it’s clear the rules are very specific. Banks can only offer a limited type of account – client money accounts – and these accounts have strict requirements. They must be separate from the bank’s own funds, can’t earn interest, and have to be in Pakistani rupees. Mixing a crypto firm’s money with client funds is absolutely prohibited, and cash deposits or withdrawals aren’t allowed. Crucially, banks are completely blocked from investing in or holding any cryptocurrencies, either with their own money or their customers’. The intention here isn’t to get banks involved in the crypto market itself, but simply to provide a pathway for crypto firms to access banking services. The framework is deliberately designed to give access, not exposure.

The Market Being Formalized

Pakistan has a surprisingly large, unofficial cryptocurrency market worth between $21 and $25 billion. This includes all crypto-related activity – buying, selling, and holding – that has happened outside of traditional banks and financial regulations since 2018. This activity relies on direct transactions between individuals, unregulated platforms, and money sent through unofficial routes because formal options weren’t available.

Changes to how banks handle digital assets don’t create new money; they simply change the system through which existing funds move. The $21–$25 billion in activity was already happening. What new licensing and dedicated bank accounts do is create a secure, regulated way to track these transactions, ensure compliance with anti-money laundering rules, and bring this capital into a system where it can be taxed and monitored. This allows it to eventually become part of Pakistan’s overall financial system. For a country undergoing economic reforms with IMF support, bringing a $25 billion informal market into the formal economy isn’t just about cryptocurrency—it’s fundamentally a matter of government finances.

The Framework

PVARA’s licensing process happens in two steps. First, they issue a No-Objection Certificate within 60 days if the application is complete. Second, businesses must fully incorporate in Pakistan according to the Companies Act 2017, provide IT and cybersecurity details, and establish a thorough anti-money laundering and counter-terrorism financing system. Recently, Virtual Asset Service Providers (VASPs) have been legally recognized as Financial Institutions under the AML Act 2010, meaning they face the same level of monitoring as traditional banks.

What makes Pakistan’s crypto rules unique is its requirement for a Sharia compliance review. Every crypto company that gets a license must have its services approved by a Sharia board before offering them to customers – a practice mirroring Pakistan’s Islamic finance system and not seen elsewhere globally. Additionally, any transaction over 1 million Pakistani Rupees must follow the ‘Travel Rule,’ meaning complete information about the sender and receiver is needed, and these records must be kept for at least ten years.

As an analyst, I want to emphasize that operating without the proper licensing isn’t just a regulatory issue – it’s a criminal offense. We’re talking about potential jail time of up to five years, and hefty fines reaching 50 million Pakistani Rupees. This framework isn’t meant to be a sandbox for testing things out; it’s a clearly defined path with serious repercussions if you step outside of it.

The Strategic Ambitions

The current banking system is just one part of a broader digital finance system Pakistan is developing, working on three different areas at the same time.

The initial focus is on involving private companies. Binance and HTX are already in talks about obtaining the necessary licenses. The Ministry of Finance has signed an agreement with Binance to investigate turning up to $2 billion of government assets into digital tokens. SC Financial Technologies, which is connected to World Liberty Financial, is discussing the use of USD-based stablecoins for sending money internationally. This partnership is particularly noteworthy because World Liberty Financial has ties to the Trump administration, and representatives from that administration were present at US-Iran talks in Islamabad just two days prior.

The second area of focus is building a modern financial system. The State Bank is testing a central bank digital currency (CBDC), a digital form of national money designed to work with, not against, existing and regulated cryptocurrency businesses. The third area involves Pakistan considering holding Bitcoin as a strategic reserve asset – a move that puts the country among a small group of nations viewing Bitcoin as a long-term investment rather than just something to speculate on.

Three tracks. One country. All moving simultaneously in the same two-week window.

What the Opening Actually Means

Pakistan’s regulations for crypto are structured to acknowledge the industry without fully opening it up. Banks are allowed to provide services to crypto companies, but they aren’t permitted to directly handle cryptocurrencies themselves. Virtual Asset Service Providers (VASPs) can operate, but face legal consequences if they don’t have the required licenses. Taxes on profits from crypto investments are currently 15%, but are expected to increase to 20% due to demands from the International Monetary Fund (IMF). Furthermore, all financial products must be approved by a religious compliance board before being offered to customers.

Pakistan has created a controlled system for handling $25 billion in financial activity. This system is intentionally limited and closely watched to protect the country’s banks from the risks associated with this type of money flow. The key question now is whether this system is flexible enough to attract major international companies, or if it’s too restrictive and will simply drive activity back into unregulated channels. The next year will reveal the answer.

While not a full commitment, Binance’s recent actions—signing a $2 billion agreement for tokenizing assets and applying for a VASP license—indicate that major platforms are prepared to comply with existing regulations.

The $25 billion generated by Pakistan’s current, largely unregulated market won’t suddenly switch to a formal system with taxes of 15-20%, religious oversight, and a ten-year data storage rule. Instead, the current system and any new formal system will likely operate side-by-side for years. Pakistan has created the structure for a formal market, but attracting that $25 billion to use it will be the real challenge.

Pakistan is exploring multiple financial avenues simultaneously – including a $2 billion agreement to tokenize assets with Binance, a central bank digital currency pilot program, and research into Bitcoin reserves – not choosing one over the others. This approach allows the country to diversify its financial options and mitigate risk.

As a researcher, I want to be clear that the information I present here is purely for educational purposes. It’s not financial advice, and I don’t recommend any particular investment or cryptocurrency. Before you make any investment decisions, please do your own thorough research and, importantly, consult with a qualified financial advisor.

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2026-04-15 17:48