Pakistan scholars reject crypto as regulator engages

TLDR

Pakistans leading Islamic scholars have issued a fatwa against crypto transactions while the countrys new crypto regulator is pushing for continued dialogue and a more nuanced framework.

1. Mufti Taqi Usmani and other scholars declared crypto purchases impermissible under Sharia, saying tokens like Bitcoin and USDT are not wealth but fictitious account entries.
2. Pakistans Virtual Assets Regulatory Authority (PVARA) is engaging these scholars, arguing that blockchains, stablecoins and tokenized assets should be assessed individually rather than banned as one category.
3. The clash between religious opinion and regulatory ambitions could shape banking access, licensing and future plans for state-backed stablecoins and tokenized assets in Pakistan and across Islamic finance.

Deep Dive

1. Religious Ruling Against Crypto

Mufti Muhammad Taqi Usmani, one of the most influential Islamic scholars in Pakistan, has issued a fatwa declaring cryptocurrency usage and payments haram (forbidden) under Sharia, describing digital assets as fictitious numbers in an account that do not qualify as maal (wealth) under Islamic law. The ruling, signed with several other scholars at Jamia Darul Uloom Karachi, explicitly rejects purchases made with crypto, including stablecoins like USDT and major tokens such as Bitcoin and Ethereum, and even instructs buyers to return goods or delete online course materials acquired via crypto payments. Although this fatwa is not legally binding, it carries significant weight in a country where over 96% of the population is Muslim and could strongly influence attitudes toward digital assets among observant investors and businesses.

2. Regulators Engagement And Framework

Pakistans Virtual Assets Regulatory Authority (PVARA), led by chairman Bilal bin Saqib, has responded by meeting Usmani and calling for continued dialogue rather than a blanket verdict against all digital assets, stressing that blockchains, stablecoins and tokenized real-world assets represent different technologies and use cases that merit separate technical and Sharia reviews. At the same time, Pakistan is moving ahead with its formal framework: the Virtual Assets Act 2026 established PVARA as a federal licensing body, and the State Bank of Pakistan recently allowed banks to open accounts for PVARA-licensed virtual asset service providers, ending years of banking restrictions on regulated crypto firms. Regulators also continue consulting on rules for exchanges, custodians, brokers and token issuers, with Sharia compliance built into the licensing process through oversight by Islamic finance scholars.

3. Impact On Users And What To Watch

Estimates suggest tens of millions of Pakistanis use crypto informally, so the fatwa could chill adoption, push activity further into grey channels or redirect interest toward clearly Sharia-compliant structures such as fully backed stablecoins or tokenized real-world assets. The key variables to watch are whether scholars accept PVARAs case-by-case approach, whether unbacked cryptocurrencies remain classified as non-wealth, and how that affects planned initiatives like a sovereign stablecoin, tokenization of state assets and potential state-held Bitcoin reserves. Beyond Pakistan, other Muslim-majority countries already vary in their treatment of crypto, so a high-profile ruling here could become a reference point in wider Islamic finance debates.

Conclusion

Pakistans clash between a strict religious ruling and an increasingly structured regulatory approach illustrates how cryptos future in Muslim-majority markets will depend as much on Sharia interpretations as on legislation. For crypto users and projects, the opportunity lies in designs that can satisfy both, while the risk is that unbacked, speculative tokens remain on the wrong side of influential religious opinion.