Pakistan’s rapid embrace of cryptocurrency has been clouded by a recent Islamic edict declaring digital assets impermissible under Shariah law.
The country’s regulator, the Pakistan Virtual Assets Regulatory Authority (PVARA), is now seeking clarification from religious scholars to distinguish between speculative cryptocurrencies and asset‑backed tokens.
Clarification for Decentralized Assets
In June 2026, the influential Jamia Darul Uloom Karachi seminary issued a fatwa ruling that cryptocurrency does not constitute “wealth” under Islamic law and therefore cannot be used as a valid means of payment.
The ruling was signed by leading scholars, including Mufti Muhammad Taqi Usmani, a prominent authority in Islamic finance.
The edict was issued in response to a query about whether books and online courses could be purchased using crypto, with scholars concluding that such transactions were invalid.
This decision has cast doubt on Pakistan’s ambitious crypto agenda. The government has been moving quickly to formalize the country’s large retail crypto market, exploring tokenized state assets, advancing exchange licensing, and even pursuing “crypto diplomacy” through cross‑border stablecoin initiatives.
However, the fatwa has introduced uncertainty, particularly for bank‑led adoption and institutional participation.
PVARA’s Response
Bilal bin Saqib, chairman of PVARA, has asked the seminary to clarify its position by distinguishing between speculative cryptocurrencies like Bitcoin and asset‑backed digital tokens such as gold‑backed stablecoins or blockchain‑recorded sukuk (Islamic bonds).
Saqib emphasized that the central question raised by the fatwa is whether a digital asset can be recognized as “maal,” or wealth, under Shariah. He argued that asset‑backed tokens represent enforceable claims on tangible assets and should be treated differently from purely speculative tokens.
The regulator is now in discussions with scholars to assess digital assets by category rather than as a single class, hoping to preserve the government’s crypto policy momentum while respecting religious concerns
Pakistan’s Crypto Thrust
Pakistan is one of the world’s largest retail crypto markets, with millions of users trading digital assets despite regulatory ambiguity.
The government has sought to harness this demand by passing the Virtual Assets Act in March 2026, establishing PVARA as a federal regulator with authority to license exchanges, custodians, and token issuers.
The fatwa, however, threatens to slow institutional adoption. Analysts warn that without religious approval, banks and large financial institutions may hesitate to engage with crypto, limiting the government’s ability to integrate digital assets into mainstream finance.
While retail trading volumes remain unaffected for now, the long‑term trajectory of Pakistan’s crypto sector may hinge on whether scholars accept asset‑backed tokens as permissible under Shariah.
