Pakistan regulator deepens crypto talks after fatwa

TLDR

Pakistans new virtual assets regulator is engaging Islamic scholars after a recent fatwa declared crypto payments, including stablecoins like USDT, impermissible under Shariah.

1. A group of influential scholars issued a ruling that crypto tokens do not qualify as valid money or wealth in Islamic law, rejecting purchases made with crypto.
2. Pakistans Virtual Assets Regulatory Authority (PVARA) is responding with deeper dialogue, seeking nuanced Shariah and technical review instead of changing licensing rules immediately.
3. For crypto users and firms, the key risk is how future Shariah-compliant rules emerge, not an instant ban, so regulatory consultations and new guidance will be the main signals to watch.

Deep Dive

1. The Fatwa Against Crypto Payments

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

Reports describe crypto as merely the recording of fictitious numbers in an account, leading the scholars to conclude that it lacks the legal status needed for money or wealth under Islamic jurisprudence, and therefore cannot be used for valid commercial payments.

This fatwa carries significant weight in Pakistan, where roughly 96 percent of the population is Muslim, and religious rulings often influence financial policy and public behavior.

2. Regulators Dialogue-First Response

Bilal bin Saqib, chair of the Pakistan Virtual Assets Regulatory Authority, met Mufti Usmani and called for ongoing dialogue on blockchain, digital assets, stablecoins and tokenized real-world assets, arguing that these categories require careful technical assessment alongside rigorous Shariah examination, rather than being viewed through a single lens as reported by Cointelegraph.

Despite the fatwa, PVARA has not rolled back its framework. The Virtual Assets Act 2026 established PVARA to license and supervise exchanges, custodians, brokers and issuers, and the State Bank of Pakistan recently allowed banks to open accounts for PVARA-licensed firms, ending an eight-year banking restriction on regulated crypto businesses.

3. Impact And What To Watch Next

In the near term, the fatwa mainly affects perceptions of using crypto as payment, especially for everyday purchases, but it does not automatically invalidate trading, custody or tokenization projects under civil law.

Longer term, key signals will be whether scholars differentiate between speculative tokens and asset-backed or payment-focused structures, and whether PVARA issues specific Shariah-compliant standards for stablecoins and tokenized real-world assets.

For crypto firms targeting Pakistan or the wider Islamic finance market, scrutiny of USDT and similar instruments will likely increase, and product design may need to emphasize clear backing, legal claims on underlying assets and transparent risk controls to gain religious approval.

Conclusion

Pakistan is moving from blanket restrictions toward a regulated virtual asset sector at the same time that leading scholars question the Shariah status of crypto payments. The regulators choice to deepen dialogue instead of reversing its new framework suggests a search for middle ground where digital assets can operate within Islamic finance principles. The next phase of rules, especially around stablecoins and tokenized assets, will determine how much practical room remains for crypto in one of the worlds largest Muslim markets.