MV Capital - Pakistan Crypto Sector Faces Shariah Ruling on Digital Assets

Pakistan’s push for regulated digital assets meets resistance from leading Islamic scholars who deem cryptocurrencies incompatible with Shariah principles, prompting calls for detailed review and continued talks

Scholars Issue Fatwa on Crypto Transactions

A prominent group of Islamic scholars at Jamia Darul Uloom Karachi, including Mufti Taqi Usmani, released a fatwa stating that cryptocurrencies do not qualify as recognized wealth under Islamic law. The ruling specifically addresses stablecoins such as USDT and extends to transactions involving purchases of goods or services.

The scholars described digital tokens as fictitious numerical entries rather than legitimate property. In response to specific queries about buying books and online courses with cryptocurrency, the fatwa declared such transactions invalid, instructing buyers to return items or delete materials.

Key Elements of the RulingCryptocurrencies fail to meet the Shariah standard of "maal" (wealth).
Transactions using digital assets are considered impermissible.
The decision applies broadly, including to stablecoins and everyday spending.

Regulatory Response and Dialogue

Bilal bin Saqib, Chairman of the Pakistan Virtual Assets Regulatory Authority (PVARA),engaged in discussions with Mufti Taqi Usmani following the fatwa. Saqib described the meeting as constructive and stressed the need for ongoing consultation among regulators, scholars, and industry participants.

Bilal bin Saqib remarked that blockchain technology, digital assets, stablecoins, and tokenized real-world assets represent diverse technologies and applications that require separate evaluation rather than a single judgment.PVARA Chairman Bilal bin Saqib

Saqib emphasized shared goals of protecting citizens from fraud and financial harm while advocating for careful technical and Shariah assessments of different asset types.

Pakistan’s Regulatory Framework Advances

Pakistan has taken steps to formalize its approach to digital assets. The Virtual Assets Act 2026 established PVARA as the central regulatory body responsible for licensing exchanges, custodians, and token issuers. Licensed entities must comply with Shariah standards through an advisory committee of Islamic finance experts.

In April 2024, the State Bank of Pakistan began allowing bank accounts for licensed virtual asset service providers, marking a shift from previous restrictions. These measures aim to bring structure and consumer protections to the sector.

Key Regulatory Milestone	Date	Details
Bank Accounts for VASPs	April 2024	State Bank permits accounts for licensed providers
Virtual Assets Act	March 2026	Establishes PVARA and licensing framework

Context of Large User Base

Pakistan ranks among the top countries for crypto adoption, with estimates of around 40 million users. This scale adds weight to decisions on how digital assets fit within the country’s financial and religious framework. With a population that is over 96% Muslim, religious opinions carry substantial influence on public acceptance and policy direction.

Core Considerations in the DebateDistinguishing between different blockchain applications and asset categories.
Aligning new regulations with established Islamic finance principles.
Balancing innovation with protections for users in a major adoption market.

The discussions between PVARA and scholars signal an effort to address these issues through continued engagement rather than immediate conclusions. The outcome of this process will shape the future operation of digital assets within Pakistan’s legal and religious context.