As of October 8, 2026, Pakistan’s rules do not support either blanket claim that cryptocurrency is fully legal or that it is categorically banned. The State Bank of Pakistan (SBP) says its 2018 warning to regulated financial institutions was issued because no legal framework existed—not because crypto had been declared illegal. Pakistan has since enacted the Virtual Assets Act, 2026, established the Pakistan Virtual Assets Regulatory Authority (PVARA), and replaced that 2018 instruction with conditional bank-account access for licensed virtual asset service providers (VASPs). Virtual assets are still not legal tender or government-backed, and SBP-regulated institutions cannot invest in or hold them.
What SBP’s clarification means
The key distinction is between rules for financial institutions and the legal position of every individual user. SBP’s May 30, 2025 clarification said that its 2018 advice to regulated entities to avoid virtual assets was due to the absence of a legal and regulatory framework, “not because it was declared illegal in the country.” SBP’s May 2025 clarification corrects a common reading of the older circular: it was an instruction to specified institutions, not a declaration that every person’s purchase, possession, or trade was illegal.
That distinction does not make cryptocurrency legal tender or a government-backed payment instrument. In its 2018 circular, SBP said virtual currencies and ICO tokens were not legal tender and were not issued or guaranteed by Pakistan’s government. The current framework regulates VASPs and their access to banking services; it does not turn virtual assets into official money.
How Pakistan’s rules changed
| Date | Development | What it means |
|---|---|---|
| April 6, 2018 | SBP Circular No. 03 of 2018 told banks and other listed regulated financial and payment entities to refrain from dealing in virtual currencies or tokens and not to facilitate customers’ transactions. Read the 2018 SBP circular. | The direction applied to those regulated entities. SBP also stated that virtual currencies were not legal tender and were not government-issued or guaranteed. |
| May 30, 2025 | SBP clarified why it issued the 2018 advice. Read SBP’s clarification. | SBP said the advice reflected the absence of a framework, not a declaration that virtual assets were illegal in Pakistan. |
| March 2026 | The Virtual Assets Act, 2026 was enacted, establishing the statutory basis for PVARA’s role as regulator. The Pakistan Code lists the Act; see also PVARA’s overview. | PVARA licenses, supervises, and regulates virtual assets and VASPs. The Pakistan Code notes that its online content is under review and points readers to Gazette notifications if there is doubt. |
| April 14, 2026 | SBP issued Circular Letter No. 10 of 2026, replacing the 2018 circular. Read the current SBP circular. | SBP-regulated entities may open accounts for duly licensed VASPs, subject to conditions. Holders of a PVARA NOC may receive a limited-purpose account for licensing formalities, not unrestricted transaction services. |
| April 26, 2026 | PVARA issued an advisory on virtual-asset-related announcements and activities. Read PVARA’s advisory. | Services provided to users in Pakistan—including issuance, transfer, custody, exchange, or arrangement of virtual assets—fall within PVARA’s regulatory ambit. Covered agreements or pilots require prior authorization. |
What the current SBP circular allows—and requires
The April 2026 circular is about SBP-regulated banks and other entities, not a general permission for all crypto activity. A regulated institution may provide banking services to a VASP only under the circular’s conditions and applicable PVARA authorization.
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- Verify the authorization: Before onboarding or starting activity, the institution must obtain and retain the VASP’s valid PVARA license and independently verify it with PVARA.
- Keep client money separate: Where applicable, a separate Client Money Account (CMA) must be used to settle authorized VASP transactions. VASP funds must be segregated from client funds; commingling is prohibited.
- Apply CMA restrictions: CMAs must be denominated in Pakistani rupees, non-remunerative, and used for authorized transactions. Cash deposits and withdrawals are not permitted, and CMA funds cannot secure financing or credit for the VASP.
- Assess and monitor risk: Banks must conduct due diligence on the VASP’s business, services, onboarding, customers, and geographies; adapt customer risk profiling; apply risk-based controls and monitoring; and report suspicious transactions under applicable anti-money-laundering requirements.
- Limit NOC accounts: A PVARA NOC supports only a limited-purpose account for completing licensing formalities. Additional services, including virtual-asset-related transactions, can follow only after the VASP receives its license and applicable conditions are met.
The circular also draws a firm line around the financial institution itself: SBP-regulated entities may not invest, trade, or hold virtual assets using their own funds or customer deposits. They remain responsible for other applicable SBP requirements, including foreign-exchange rules.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What this means for individuals
The 2018 and 2026 SBP circulars govern regulated financial institutions. They establish what those institutions may do and the conditions under which they may serve licensed VASPs; they do not, by themselves, settle every question about an individual’s purchase, possession, or trade of virtual assets.
Nor does a bank’s ability to serve a licensed VASP mean that every exchange, wallet, token, or transaction is authorized. PVARA’s April 2026 advisory says covered services to users in Pakistan—including services involving stablecoins and allied blockchain-based solutions—fall within its regulatory ambit, and that agreements or pilots that provide or directly enable those services require prior authorization. For a particular service, check its current PVARA authorization and the law and regulations that apply to it.
The official materials cited here do not resolve every individual tax, foreign-exchange, or cross-border fact pattern. Do not treat institutional account rules as a personal legal opinion; the relevant details and other applicable rules matter.
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