Pakistan scholars' crypto fatwa sparks regulation debate

TLDR

A recent Islamic fatwa in Pakistan declaring crypto payments impermissible under Shariah is colliding with the countrys new move toward regulated digital assets.

1. Leading scholars at Jamia Darul Uloom Karachi ruled that cryptocurrencies, including stablecoins like USDT, do not meet Islamic criteria for money or property.
2. Pakistans new Virtual Assets Act 2026 and the PVARA regulator are trying to build a licensed crypto sector, creating tension with the religious ruling.
3. Regulators are seeking dialogue with scholars to align Shariah compliance and consumer protection, and future rules may favor Islamic finance friendly token structures.

Confidence: high, based on consistent reports from Pakistani regulators and major crypto media.

Deep Dive

1. What The Fatwa Says

Mufti Taqi Usmani and five other scholars at Jamia Darul Uloom Karachi issued an Islamic legal ruling stating that purchases made with crypto, including stablecoins like USDT, are not permitted because digital tokens do not qualify as recognized property or wealth under their interpretation of Shariah.

In a country where about 96 percent of the population is Muslim, such a ruling carries real weight for both public perception and policymakers and could discourage everyday use of crypto for payments, especially among religiously conservative users.

2. Pakistans Regulatory Pivot

At the same time, Pakistan has started building a formal crypto framework. The Virtual Assets Act 2026 created the Pakistan Virtual Assets Regulatory Authority (PVARA) as the licensing and oversight body for virtual asset service providers.

On 15 April 2024, the State Bank of Pakistan allowed banks to open accounts for PVARA licensed VASPs, ending an eight year restriction on regulated institutions dealing with crypto, as described in a recent regulatory overview.

This means the state is moving from an informal ban by banking restriction toward supervised markets, even as key scholars question whether crypto can be used at all under Islamic law.

3. Dialogue, Risk And What To Watch

PVARA chairman Bilal bin Saqib has responded by calling for ongoing dialogue, arguing that blockchain, cryptocurrencies, stablecoins and tokenized real world assets are diverse technologies that need careful technical and Shariah assessment rather than one blanket verdict, according to his public comments.

He also highlights risks of fraud and financial harm for ordinary Pakistanis, suggesting regulators may lean toward tightly controlled, possibly Shariah screened products, such as asset backed tokens or structures modeled on existing Islamic finance contracts.

Conclusion

Pakistan now has two powerful forces shaping crypto policy: a new regulatory regime that wants licensed, supervised markets, and a high profile fatwa that rejects crypto payments under Shariah.

How these are reconciled will determine whether Pakistan becomes a hub for Shariah compliant digital assets or retreats into very narrow, institution only use. Watching future statements from PVARA, the State Bank and leading scholars will be key to understanding the next phase.