SBP replaces 2018 crypto ban with new VASP rules

Banks may open accounts for licensed virtual asset firms under strict AML compliance

KARACHI:

The State Bank of Pakistan (SBP) has issued a circular enabling regulated entities to open and maintain bank accounts for Pakistan Virtual Asset Regulatory Authority (PVARA)-licensed virtual asset service providers (VASPs) and their customers, subject to strict compliance and anti-money laundering (AML) requirements, according to a circular issued by the central bank and a statement by the virtual asset regulator.

The move follows the enactment of the Virtual Assets Act, 2026, and replaces the central bank's 2018 circular that prohibited dealing in virtual currencies. This marks a transition from a previously restrictive environment to a structured, regulated framework.

Prior to onboarding a VASP or initiating any activity with it, banks shall obtain and retain a copy of the VASP's valid licence issued by PVARA and independently verify its authenticity from PVARA. Banks shall open separate transactional accounts, known as client money accounts (CMAs), for settlement of authorised transactions of licensed VASPs based on the VASP's business model. Strict segregation between CMAs and other types of accounts of VASPs shall be ensured, and commingling of VASP funds with those of their clients shall be strictly prohibited. CMAs shall be PKR-denominated, non-remunerative accounts for executing authorised transactions. Cash deposits and withdrawals shall not be permitted in CMAs, and funds maintained in CMAs shall not be used as collateral or security to provide any form of financing or credit facilities to VASPs.

Banks shall conduct complete due diligence of VASPs to understand the nature and scope of their business, specific activities conducted, customer onboarding process, customer base and geographic markets. Banks shall also make appropriate amendments to their customer risk profiling model to account for risks posed by VASPs and report any suspicious transactions to the Financial Monitoring Unit.

Banks may also open limited-purpose accounts for entities holding NOCs issued by PVARA, enabling them to complete formalities for obtaining a licence. Only upon the grant of a licence by PVARA can the bank extend additional services, including virtual asset-related transactional activity.