Quick Answer
Cryptocurrency is currently illegal and banned in Pakistan.
- The State Bank of Pakistan currently bans all cryptocurrency transactions.
- However, the government is exploring regulation via a new Crypto Council.
Legal Status of Crypto in Pakistan
The legal status of cryptocurrency in Pakistan is complex; officially, it is considered illegal. This is because the State Bank of Pakistan (SBP) and the Ministry of Finance have declared it banned, with no formal legal framework recognizing it as legal tender. However, the situation is muddled by the government's simultaneous exploration of regulation through bodies like the Pakistan Crypto Council, creating a confusing landscape for users and investors. While authorities like the SBP and the Securities and Exchange Commission of Pakistan (SECP) enforce general financial compliance, specific regulations and compliance requirements for cryptocurrency do not yet exist.
Current Regulations
Currently, all cryptocurrency transactions are considered illegal in Pakistan. The State Bank of Pakistan (SBP) and the Ministry of Finance maintain that a ban is in place, reinforced by an SBP directive from 2024 that declared digital currencies illegal. Consequently, the country's Financial Monitoring Unit actively refers crypto-related cases to law enforcement agencies for action. This strict stance exists alongside a recent government push to explore regulation, highlighted by the formation of the Pakistan Crypto Council in March 2025.
Regulatory Authorities
Several regulatory bodies in Pakistan are involved in the oversight and enforcement of rules surrounding cryptocurrency.
- State Bank of Pakistan (SBP): As the country's central bank, the SBP has declared cryptocurrencies illegal and issued public notices banning all related transactions. Its Financial Monitoring Unit also refers crypto-related cases to law enforcement, enforcing the current prohibition.
- Securities and Exchange Commission of Pakistan (SECP): This authority regulates the securities market and works with the SBP to enforce the ban on crypto. It has also previously explored potential regulatory frameworks for digital assets through a position paper.
- Ministry of Finance (MoF): The MoF confirms the government's official position on the crypto ban and chairs the council exploring future digital asset policy. It has clarified that any legalization would require parliamentary approval and a formal legal framework.
- Financial Monitoring Unit (FMU): As the national financial intelligence unit, the FMU monitors for money laundering and terrorism financing. It plays a direct enforcement role by referring crypto-related cases to law enforcement agencies.
- Pakistan Crypto Council (PCC): This new government-led body was formed to develop a regulatory framework for digital assets and integrate blockchain technology into the financial system. Its creation signals a potential shift from the current ban toward a regulated crypto ecosystem.
Historical Context
Pakistan's crypto regulations have evolved from a clear prohibition to a state of confusion. In 2018, the State Bank of Pakistan (SBP) effectively banned crypto by advising financial institutions against processing virtual currency transactions. A potential policy shift emerged in 2020 when the Securities and Exchange Commission of Pakistan (SECP) released a position paper exploring regulatory options. However, this was followed by an SBP directive in 2024 that reaffirmed the ban. In 2025, the government created more uncertainty by launching the Pakistan Crypto Council to explore regulation, even as officials insisted the ban remains in place.
Compliance Requirements for Businesses in Pakistan
- Anti-Money Laundering (AML) Checks: Businesses must implement a Risk-Based Approach (RBA) to identify, assess, and mitigate financial crime risks. This includes conducting Customer Due Diligence (CDD), performing ongoing transaction monitoring to detect unusual activity, screening all parties against sanctions lists, and reporting suspicious transactions to the Financial Monitoring Unit (FMU).
- Know Your Customer (KYC) Requirements: Financial institutions are required to identify and verify the identity of all customers and their beneficial owners. This involves collecting official identification documents, understanding the nature of the business relationship, and determining the customer's source of funds. For clients deemed high-risk, Enhanced Due Diligence (EDD) procedures are mandatory.
- Targeted Financial Sanctions (TFS): A core requirement is the real-time screening of customers and transactions against national and international sanctions lists, particularly those issued under the UNSC Act and Anti-Terrorism Act. If a match is found, institutions must freeze the assets of the designated person or entity immediately and without prior notice.
- Record Keeping: All records related to customer due diligence, account files, business correspondence, and transaction history must be securely maintained for a minimum of ten years after the conclusion of the business relationship or transaction.
- Internal Controls and Training: Companies must establish a robust internal control framework, which includes an independent audit function, thorough employee due diligence, and a designated compliance officer. It is also mandatory to conduct annual AML/CFT training for all staff, including senior management and the board of directors.
Why this matters for Cross-Border Payments
For businesses engaged in cross-border payments with Pakistan, the current regulatory landscape presents significant hurdles. The outright ban on cryptocurrencies eliminates a potentially faster and more cost-effective payment rail, forcing reliance on traditional financial systems that are often slower and more expensive. Furthermore, the stringent AML, KYC, and sanctions screening requirements for all transactions introduce operational friction, leading to potential delays and increased compliance overhead for international companies. This combination of a strict ban and regulatory ambiguity creates a high-risk environment, deterring investment in modern payment solutions for the Pakistani market.
How Lightspark Enables Compliant Crypto-Native Payments
Lightspark offers a global payments network, the Money Grid, built on Bitcoin to make money move instantly. It provides two access points: Lightspark Connect, for native Bitcoin integration, and Grid Switch, which links domestic real-time payment systems. This dual approach enables fast, low-cost cross-border payments across over 140 countries, bypassing the delays and high fees of traditional finance. By using Bitcoin for settlement, it streamlines international transactions for businesses and consumers.
To help regulated institutions navigate complex compliance, Lightspark provides essential tools. Its platform offers audit-ready reporting to meet record-keeping rules and flexible custody options for security policy alignment. The infrastructure is designed with features like travel rule and OFAC screening support, facilitating adherence to AML and TFS obligations without Lightspark directly handling the regulatory burden for its clients.
To learn more about how Lightspark can help your business, contact their team to get started.
Notice: This article is provided for informational purposes only and does not constitute legal advice.
FAQs
What are the penalties for trading cryptocurrency in Pakistan?
Since there is no specific crypto law, penalties are enforced under existing financial regulations like the Foreign Exchange Regulation Act. Violators could face significant fines, imprisonment, and the confiscation of their digital assets by law enforcement agencies.
Can I legally own cryptocurrency in Pakistan if I don't trade it?
The official ban covers all transactions, making buying and selling illegal, while simple ownership exists in a legal gray area. However, holding crypto is extremely risky as authorities can still take action under broader anti-money laundering and financial crime laws.
Is cryptocurrency mining legal in Pakistan?
There are no specific laws that explicitly outlaw cryptocurrency mining, but the activity is considered illegal by extension of the SBP's ban on all crypto-related activities. Engaging in crypto mining carries the same legal and financial risks as trading or transacting with digital currencies.
Sources
- AML Division. "ANTI-MONEY LAUNDERING, COMBATING THE FINANCING OF TERRORISM & COUNTERING PROLIFERATION FINANCING (AML/ CFT/ CPF) REGULATIONS FOR STATE BANK OF PAKISTAN’S REGULATED ENTITIES (SBP-REs) (Updated up to November 28, 2022)." State Bank of Pakistan, 28 Nov. 2022, https://www.sbp.org.pk/bprd/2022/CL33-Annex-B.pdf.
- Freeman Law. "Pakistan and Cryptocurrency." Freeman Law, https://freemanlaw.com/cryptocurrency/pakistan/.
- Hussain, Abid. "‘Clear message’: Can Binance founder help Pakistan become a crypto power?" Al Jazeera, 10 Apr. 2025, https://www.aljazeera.com/news/2025/4/10/clear-message-can-binance-founder-help-pakistan-become-a-crypto-power.
- Khan, Muhammad Arshad. "Public Notice CAUTION REGARDING RISKS OF VIRTUAL CURRENCIES." State Bank of Pakistan, 6 Apr. 2018, https://www.sbp.org.pk/warnings/pdf/2018/PBNT-VC.pdf.
- Kiani, Khaleeq. "Crypto policy in disarray as SBP, ministry insist ban is still in place." DAWN.COM, 30 May 2025, https://www.dawn.com/news/1914192.
- Monitoring Desk. "Digital currency remains banned in Pakistan despite govt’s crypto push, officials clarify." Profit by Pakistan Today, 30 May 2025, https://profit.pakistantoday.com.pk/2025/05/30/digital-currency-remains-banned-in-pakistan-despite-govts-crypto-push-officials-clarify/.
- State Bank of Pakistan, Agricultural Credit and Microfinance Department. "Revised AML/CFT Regulations for MFBs." State Bank of Pakistan, 30 Dec. 2019, https://www.sbp.org.pk/acd/2019/C3-Revised-AML-CFT-Regulations-MFBs.pdf.
- State Bank of Pakistan, Banking Policy & Regulations Department. "AML/CFT Guidelines on Risk Based Approach for Banks & DFIs (Updated up to March 31, 2015)." Financial Monitoring Unit, 31 Mar. 2015, https://www.fmu.gov.pk/docs/RBA.pdf.
