The State Bank of Pakistan has taken a definitive step toward the formalization of the national virtual asset ecosystem by issuing BPRD Circular Letter No. 10 of 2026. This landmark directive follows the recent enactment of the Virtual Assets Act, 2026, and effectively reverses the long-standing restrictive environment that had previously prohibited financial institutions from dealing with virtual currencies. Under the new guidelines, SBP-regulated entities are now authorized to open and maintain bank accounts for Virtual Asset Service Providers that hold a valid license or No Objection Certificate from the newly established Pakistan Virtual Asset Regulatory Authority. This transition toward a structured and regulated framework is expected to provide the necessary legal clarity to foster sustainable growth and attract significant investment into the domestic digital asset market.
The central bank’s latest instructions replace the previous BPRD Circular No. 03 of 2018, which had served as a blanket ban on virtual asset transactions for nearly eight years. According to the new circular, banks and other regulated entities must adhere to strict compliance requirements before onboarding any VASP. Specifically, financial institutions are required to obtain and independently verify a copy of the entity’s license from PVARA to ensure authenticity. Furthermore, the central bank has mandated the creation of separate transactional accounts, known as Client Money Accounts, to settle authorized transactions. This measure is designed to ensure the strict segregation of VASP corporate funds from those belonging to their clients, prohibiting any form of commingling to protect consumer interests.
In addition to segregation, the SBP has outlined clear operational constraints for these new accounts. All Client Money Accounts must be PKR-denominated and non-remunerative, meaning they will not accrue interest. The circular explicitly prohibits cash deposits and cash withdrawals from these accounts, ensuring that all movements of capital remain digitally traceable within the formal banking system. Moreover, funds maintained in these accounts cannot be used as collateral or security for any form of financing or credit facilities offered to the VASP. These safeguards are intended to prevent the volatile nature of virtual assets from impacting the stability of the traditional banking sector while maintaining a high level of transparency.
The regulatory framework places a heavy emphasis on Anti-Money Laundering, Combating the Financing of Terrorism, and Countering Proliferation Financing. Regulated entities are now required to conduct comprehensive due diligence to understand the nature, scope, and geographic footprint of a VASP’s business. Banks must also amend their Customer Risk Profiling models to accurately account for the specific risks posed by virtual asset activities. Ongoing monitoring of the relationship between banks and VASPs is mandatory, and any suspicious transactions must be reported immediately to the Financial Monitoring Unit in accordance with the Anti-Money Laundering Act, 2010. This rigorous oversight ensures that the modernization of the financial sector does not come at the cost of national security or fiscal integrity.
This development reflects a high degree of coordination between policymakers, central bank regulators, and industry stakeholders as Pakistan advances toward a fully regulated digital economy. By providing banking access to licensed entities, the state is effectively pulling the virtual asset market out of the shadows and into a supervised environment. This move is expected to build significant trust among institutional investors and retail users who were previously wary of the lack of regulatory oversight. As Pakistan continues to evolve its digital financial architecture, the SBP remains clear that banks themselves are prohibited from investing in or trading virtual assets using their own funds or customer deposits, ensuring that the core banking system remains insulated from direct market volatility. The successful implementation of this circular marks a new chapter in the country’s journey toward digital transformation and financial inclusion.
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