TLDR
A leading Pakistani Islamic scholar has issued a fatwa declaring most cryptocurrency use impermissible under Sharia, creating a new source of uncertainty for Pakistan's fast-developing crypto sector.
- Mufti Taqi Usmanis ruling says crypto tokens including Bitcoin and USDT are not wealth in Islamic law, so purchases and payments with them are religiously invalid for many Muslims.
- The fatwa is not government law, but it clashes with Pakistans new Virtual Assets Act and licensing regime, potentially affecting banks, exchanges and tens of millions of local users.
- Regulators are now in dialogue with scholars to differentiate digital asset types, so outcomes may range from Sharia-compliant models to tighter limits on everyday crypto use.
Deep Dive
1. What The Fatwa Actually Says
Mufti Muhammad Taqi Usmani, one of Pakistans most influential Islamic scholars, and other scholars at Jamia Darul Uloom Karachi issued a fatwa stating that cryptocurrencies do not qualify as recognized property or wealth under their interpretation of Sharia.
The ruling specifically targets using crypto for payments and purchases, including stablecoins such as USDT, arguing that tokens are fictitious numbers in an account rather than real wealth. It declares such transactions impermissible (haram), and even instructs people to unwind certain purchases made with crypto.
For observant Muslims who follow Usmanis opinions, everyday use of crypto for payments, subscriptions or online purchases is now religiously problematic, even if civil law still allows it.
2. Interaction With Pakistans Crypto Regulation
Pakistan is simultaneously rolling out a formal regulatory framework for digital assets. The Virtual Assets Act 2026 created the Pakistan Virtual Assets Regulatory Authority (PVARA) to license exchanges, custodians and other crypto firms, with banks recently allowed to serve licensed providers.
This religious ruling therefore cuts across a state policy that was moving from informal bans toward regulated adoption. Reports note that Pakistan may have around 40 million crypto users through informal channels, so a widely respected scholar rejecting crypto payments can materially change behavior even without new legislation.
The debate is now about more than is crypto legal and has shifted to is crypto religiously acceptable, which can influence user adoption, product design and bank risk appetite.
3. Dialogue, Differentiation And Possible Futures
PVARAs chairman Bilal bin Saqib has met Mufti Usmani and called for digital assets to be assessed individually rather than under a blanket verdict, highlighting differences between blockchains, unbacked coins, fiat-backed stablecoins and tokenized real-world assets. Crypto news outlets describe these talks as constructive but ongoing.
Possible outcomes include Sharia-focused classifications where some structures, such as fully backed stablecoins or tokenized real assets, receive more favorable treatment than speculative tokens, or conversely, a broader religious chill on most public crypto activity in Pakistan and similar jurisdictions.
For crypto builders and users in Muslim-majority markets, the next phase is likely to involve Sharia reviews of specific products, so monitoring scholar statements and regulator guidelines becomes as important as watching new laws.
Conclusion
Pakistans fatwa declaring crypto impermissible introduces a powerful religious constraint into a market that was just beginning to formalize regulation. The core tension is between a blanket view that most tokens are not valid wealth and a regulatory push to carve out compliant, safer digital asset use. How scholars and regulators resolve this will shape whether crypto in Pakistan becomes a tightly controlled, Sharia-compliant niche or faces a broader decline in everyday adoption.
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