For eight years, Pakistan’s banks treated cryptocurrency like contraband. A 2018 State Bank of Pakistan directive, widely referenced as SBP Circular No. 3 of April 2018, barred financial institutions from processing any transaction linked to digital assets, cutting off exchanges, blockchain-based remittance startups, and custodians from the formal banking system entirely. Millions of Pakistani crypto users were pushed into peer-to-peer workarounds and offshore accounts. Exchanges such as Binance and local platforms like NayaPay and Rainak could not open a business checking account, let alone settle customer transactions through regulated rails.
That wall has come down. Under a regulatory framework built around the Pakistan Virtual Assets Regulatory Authority (PVARA), banks are now permitted to open accounts, process payments, and provide financial services to digital asset companies that hold a valid license or No Objection Certificate (NOC) from the regulator. The reversal is one of the most consequential crypto policy shifts in South Asia, arriving while neighboring India still taxes crypto gains at 30% under Section 115BBH of its Income Tax Act and has yet to stand up a dedicated licensing body for virtual asset firms.
What PVARA’s framework actually requires
PVARA was established under Pakistan’s Virtual Assets Act and began operating in early 2026. Its regulations page consolidates the Act and its implementing materials, laying out what exchanges, custodians, and payment processors must demonstrate before they can access the banking system.
The requirements are specific. According to PVARA’s licensing page, applicants must implement anti-money laundering and counter-terrorism financing (AML/CFT) programs, meet defined cybersecurity standards, and pass fit-and-proper tests for executives and key shareholders. The current pipeline runs through NOCs, which function as interim clearances while the full licensing structure matures. Firms that secure an NOC can legally engage with banks. Those that don’t remain locked out of the formal system.
The AML/CFT emphasis is not incidental. Pakistan spent years on the Financial Action Task Force’s grey list before its removal in October 2022, and the compliance infrastructure built during that period shaped PVARA’s design. The regulator’s insistence on robust anti-money laundering controls reflects both domestic policy goals and the pressure of maintaining Pakistan’s standing with international financial watchdogs.
For banks, the practical shift is straightforward: a Pakistani bank can now maintain accounts for a PVARA-cleared firm, settle its transactions, and provide payment rails without running afoul of central bank rules. Before this reversal, any crypto-adjacent banking relationship carried regulatory risk that most institutions simply refused to accept.
Why this matters beyond the regulatory text
Pakistan consistently ranks among the top countries globally for grassroots cryptocurrency adoption. Chainalysis placed it 9th in its 2023 Global Crypto Adoption Index, a position driven largely by a young, tech-literate population and a massive remittance corridor. The World Bank estimated that Pakistan received roughly $27 billion in remittances in 2023, and crypto-based transfer services have long targeted a share of that flow.
Until now, those services had no legal path into the banking system. Exchanges operating in Pakistan relied on informal channels, which meant weaker consumer protection, no regulatory oversight of transaction volumes, and no tax revenue for the government. The new framework creates a bridge, at least on paper, between the country’s large informal crypto economy and its regulated financial sector.
The regional context sharpens the significance. The UAE launched its own Virtual Assets Regulatory Authority (VARA) in Dubai in 2022 under Law No. 4 and has since licensed dozens of firms, positioning itself as a global crypto hub. India has taken a different path: steep transaction taxes and a requirement that exchanges register with the Financial Intelligence Unit, but no standalone regulator or structured licensing regime. Pakistan’s approach borrows from the UAE model, with a dedicated authority and a defined licensing pathway, though it remains far earlier in implementation.
Significant gaps remain
The framework is live, but key details are still missing from the public record. No PVARA document reviewed for this article discloses how many NOCs have been issued, how many applications are pending, or which specific firms have received clearance. Without those numbers, it is hard to tell whether the banking channel is opening in practice or only on paper.
The State Bank of Pakistan’s own role in the transition also lacks full documentation. The original prohibition traces back to SBP Circular No. 3 of April 2018, which explicitly instructed banks and payment service providers not to process, use, trade, hold, or facilitate transactions involving any form of virtual currency or token. Secondary news outlets have reported the reversal of that stance, but no new SBP circular spelling out operational guidance for banks has surfaced in publicly accessible primary sources. That gap matters because Pakistani banks typically require explicit central bank instructions before adjusting internal compliance policies. Even with PVARA’s legal authority established, the absence of a visible updated SBP circular could slow the pace at which banks actually onboard crypto clients.
There is also an unresolved question about individual users. The current framework clearly addresses licensed businesses, but whether ordinary Pakistani citizens can legally hold and trade crypto in personal capacity, and whether banks can service those individuals, is not spelled out in PVARA’s published materials. That ambiguity leaves a large segment of Pakistan’s crypto-active population in a gray zone.
The timeline for moving from NOCs to full licenses is another open question. PVARA describes the NOC stage as a bridge, but no target date for the transition has been published. Firms operating under interim clearances face the risk that their status could lapse if the permanent regime takes longer than expected to finalize. Banks, aware of that uncertainty, may treat NOC holders as higher-risk counterparties and impose tighter conditions on their accounts.
Where the real test begins
The legal permission structure is in place. The official PVARA site serves as the primary hub for regulatory updates, and its sub-pages on regulations and licensing provide the most detailed public account of what firms must do to qualify for banking access.
But permission and practice are different things. Whether Pakistan’s banking sector moves quickly to serve licensed crypto firms or adopts a wait-and-see posture will depend on factors that are not yet documented in public sources: the pace of NOC and license approvals, the specificity of any forthcoming SBP guidance, and the internal risk appetite of individual banks.
The first wave of firms to secure NOCs and successfully open functioning bank accounts will be the clearest signal that the eight-year freeze has genuinely thawed. Until that happens, Pakistan’s crypto banking reversal remains a policy achievement with an asterisk: the rules have changed, but the money has not yet moved.
