TLDR
Pakistans leading Islamic scholars have declared crypto payments impermissible under Sharia, creating real friction with the countrys new pro-regulation framework.
- A fatwa from Jamia Darul Uloom Karachi says purchases using cryptocurrencies, including USDT, are not valid wealth or money under Islamic law.
- Pakistans Virtual Assets Act 2026 and banking rules still support licensing crypto firms, but regulators now face strong religious pushback.
- Dialogue between PVARA and scholars may lead to Sharia-focused rules that differentiate payment use, investment, stablecoins and tokenized real-world assets.
Deep Dive
1. What The Sharia Ruling Says
Mufti Taqi Usmani and five scholars at Jamia Darul Uloom Karachi issued an Islamic legal ruling stating that transactions using cryptocurrencies, including stablecoins like USDT, are not permitted because tokens do not qualify as recognized property or wealth under Sharia. A detailed report describes crypto as merely the recording of fictitious numbers in an account, rejecting its status as money or store of value under their interpretation of Islamic law, including in Pakistans context of Islamic finance. This position is summarized in an Islamic scholar denounces cryptocurrencies in Pakistan article and reinforced in coverage of Pakistan seeks crypto dialogue after scholar rejects USDT payments.
Even if civil regulators permit crypto, many banks, investors and ordinary users may treat it as religiously non-compliant for payments unless a more nuanced juristic view emerges.
2. Clash With Pakistans Regulatory Push
At the same time, Pakistan has moved from blanket restrictions toward formal licensing. The Virtual Assets Act 2026 created the Pakistan Virtual Assets Regulatory Authority (PVARA), and the State Bank of Pakistan recently allowed banks to open accounts for PVARA-licensed virtual asset service providers, ending an eight-year banking ban, as outlined in Pakistan seeks crypto dialogue after scholar rejects USDT payments. Banks can serve licensed firms but cannot trade or hold crypto with their own capital. The fatwa does not overturn these laws, but given that about 96 percent of Pakistans population is Muslim, religious rulings will heavily influence how banks, courts and the public interpret and apply crypto regulation.
Legal permission is now bumping up against religious scrutiny, which could slow implementation, narrow use cases or push regulators to adjust rules for Sharia compliance.
3. Dialogue And Possible Future Path
PVARA chairman Bilal bin Saqib has responded by calling for continued dialogue, arguing that blockchain, cryptocurrencies, stablecoins and tokenized real-world assets should undergo separate technical and Sharia evaluations rather than a single blanket ruling, as reported in Pakistan crypto chief seeks dialogue after scholar rules against crypto payments. Pakistan is also exploring stablecoins and tokenized state assets with international partners, but these projects now face an extra layer of religious review. Key signals to watch are: whether scholars issue more granular guidance that distinguishes speculative trading, payments and asset tokenization, how banks interpret the fatwa in their compliance policies, and whether PVARA formalizes Sharia advisory processes for new digital-asset products.
For crypto users and builders targeting Pakistan, the edge will come from aligning products with emerging Sharia interpretations, especially around stablecoins and tokenized real-world assets, rather than assuming secular regulation alone is sufficient.
Conclusion
Pakistan is trying to build a licensed digital-asset regime at the same time that powerful religious authorities question whether crypto counts as money or wealth. The resulting tension will likely shape which use cases grow, which stall and how deeply crypto can embed in Pakistans financial system. For now, regulation continues, but durable adoption will depend on whether regulators and scholars can carve out Sharia-consistent frameworks for specific types of digital assets.
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