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State Bank of Pakistan (SBP) on Friday declared that virtual and cryptocurrencies are not legal tender in Pakistan and ordered the financial sector to not process their payments.

In a notification sent to the presidents and CEOs of all the banks, development finance institution and payment service providers in Pakistan, the SBP stated: "Virtual Currencies (VCs) like Bitcoin, Litecoin, Pakcoin, OneCoin, DasCoin, Pay Diamond etc or Initial Coin Offerings (ICO) tokens are not legal tender, issued or guaranteed by the Government of Pakistan."

"SBP has not authorised or licensed any individual or entity for the issuance, sale, purchase, exchange or investment in any such Virtual Currencies/Coins/Tokens in Pakistan," it added.

The central bank prohibited the banks "from processing, using, trading, holding, transferring value, promoting and investing in Virtual Currencies/Tokens" and also instructed them to not facilitate any such transactions of their customers.

SBP also directed the country's financial institutions to treat virtual currency transactions as suspicious and immediately report them to the Financial Monitoring Unit.