Pakistan crypto fatwa triggers regulator consultation

TLDR

An influential group of Pakistani Islamic scholars has issued a ruling against crypto use, prompting the countrys new virtual assets regulator to seek structured consultation with religious authorities and industry.

1. Leading scholar Mufti Taqi Usmani and others declared that crypto transactions, including stablecoins like USDT, do not meet Shariah criteria for money or property, making purchases with them impermissible.
2. Pakistans Virtual Assets Regulatory Authority (PVARA) responded by calling for ongoing dialogue and technical assessment to align Islamic law with the countrys new Virtual Assets Act and licensing regime.
3. For crypto users and firms, the key uncertainty is how future rules will balance religious concerns with the drive to build a regulated market, especially around stablecoins and tokenized real-world assets.

Deep Dive

1. What The Fatwa Actually Says

Scholars at Jamia Darul Uloom Karachi, led by Mufti Taqi Usmani, issued an Islamic legal ruling stating that cryptocurrency transactions, including stablecoins like USDT, are not permitted because digital tokens do not qualify as recognized wealth or property under their interpretation of Shariah.

This view challenges the idea that crypto can function as money in an Islamic context and specifically flags spending with crypto as non-compliant, rather than focusing only on speculation or trading.

Religious opinions of figures like Usmani carry significant weight in Pakistan, where around 96% of the population is Muslim.

2. How Regulators Are Responding

Bilal bin Saqib, chairman of the Pakistan Virtual Assets Regulatory Authority (PVARA), did not directly reject the ruling but publicly called for continued consultation among regulators, scholars, and industry participants, stressing that blockchain, stablecoins and tokenized real-world assets require careful technical and Shariah assessment rather than a single blanket verdict.

This comes just after Pakistan shifted from near-ban to regulated oversight: the State Bank of Pakistan recently allowed banks to serve licensed virtual asset service providers, and the Virtual Assets Act 2026 created PVARA as the statutory regulator for crypto activity.

3. What To Watch Next

The main questions are whether future guidance will:

1. Differentiate between speculative tokens and asset-backed or payment-focused products.
2. Define Shariah-compliant structures for stablecoins and tokenized RWAs.
3. Influence banking access, exchange licensing, and retail usage in practice.

If scholars and regulators can agree on categories that satisfy Islamic views of property and risk-sharing, Pakistan could become an important test case for Shariah-compliant crypto markets. If not, regulatory permissions may exist on paper but see limited uptake due to religious concerns.

Conclusion

Pakistans crypto fatwa highlights a deep tension between religious jurisprudence and the push to formalize digital asset regulation. The consultation process now underway will determine whether crypto in Pakistan evolves into a Shariah-aligned, regulated niche or faces ongoing practical constraints despite new laws.