Pakistan’s virtual assets regulator has sought clarification from the country's leading Islamic seminary regarding the religious ruling that deemed cryptocurrency transactions impermissible under Islamic law. Bilal bin Saqib, chairman of the Pakistan Virtual Assets Regulatory Authority (PVARA), said on Wednesday that he requested the clarification to distinguish between speculative cryptocurrencies and asset-backed digital tokens.
The request follows a fatwa issued in June by Jamia Darul Uloom Karachi, a prominent Islamic seminary whose guidance carries significant weight among Muslim communities both within and beyond Pakistan. The fatwa declared that cryptocurrencies do not constitute recognized wealth under Shariah law, effectively ruling them invalid as a medium of exchange. The religious authority did not immediately respond to requests for comment.
Islamabad has moved swiftly to establish regulatory frameworks for virtual assets, signaling strong government support for the crypto sector despite the fatwa. Pakistani officials have promoted tokenization of state assets and anticipate issuing licenses for crypto exchanges in the coming months. Islamabad has also sought to leverage cryptocurrencies diplomatically, engaging in talks with World Liberty Financial, linked to former U.S. President Donald Trump’s family, to explore the use of its USD1 stablecoin for cross-border payments. This initiative forms part of broader efforts Islamabad refers to as “crypto diplomacy.”
Experts acknowledge that the fatwa could impede broader adoption of cryptocurrencies beyond urban traders who have so far driven much of the country’s retail crypto activity. Waqas Ghani, head of research at Pakistani brokerage JS Global Capital, noted that the ruling might present a barrier to wider bank-led crypto adoption. Nonetheless, he observed that trading volumes remain largely unaffected at this stage.
The fatwa was issued in response to a specific inquiry about using cryptocurrency to pay for books and online courses. Mufti Muhammad Taqi Usmani, a leading Islamic finance scholar involved in the ruling, did not respond to requests for comment.
PVARA Chairman Saqib emphasized the need to evaluate different digital assets individually rather than as a uniform category. He explained that blockchain is fundamentally a record-keeping technology and not a financial asset itself. Tokens such as blockchain-recorded sukuk (Islamic bonds), gold-backed tokens, or fully reserved stablecoins represent ownership of tangible assets or have enforceable claims, which may align with Shariah principles. In contrast, purely speculative cryptocurrencies without underlying assets raise legitimate concerns under Islamic law.
Saqib said the regulator will continue engaging with religious scholars as Pakistan advances its licensing framework and explores stablecoins and real-asset tokenization. He highlighted the country’s potential to become a global leader in Shariah-compliant digital finance, stressing that scholarly guidance must remain central to the sector’s development.