Crypto fatwa sparks debate over Pakistan’s digital asset framework

Pakistan’s top crypto regulator called for digital assets to be assessed individually under Islamic law after meeting with a prominent scholar whose recent fatwa broadly rejected purchases made with cryptocurrency.

Pakistan Virtual Assets Regulatory Authority (PVARA) Chairman Bilal bin Saqib said Saturday that he held a “constructive discussion” with Mufti Taqi Usmani about digital assets and the continuing debate over their Sharia status.

Saqib said the two agreed on the need to protect Pakistanis from “fraud, exploitation, and financial harm,” but argued that blockchains, stablecoins, tokenized real-world assets and other digital assets represent different technologies and use cases that should not be evaluated as a single category.

“They merit careful technical assessment alongside rigorous Shariah examination, rather than being viewed through a single lens,” Saqib said in an X post.

His comments followed the circulation on Friday of a fatwa issued June 10 by Usmani and several other scholars affiliated with Darul Ifta at Jamia Darul Uloom Karachi. The ruling said cryptocurrencies do not qualify as “maal,” or wealth, under Sharia and described them as fictitious numerical entries recorded in an account.

The fatwa explicitly applied its reasoning to USDT and other crypto tokens. In response to questions involving books and an online course purchased using cryptocurrency, the scholars said the transactions were invalid and that the buyer did not acquire lawful ownership of the products.

It directed the purchaser to return the books and delete the course materials rather than use or transfer them. The ruling’s inclusion of both physical goods and digital services gives it a broader scope than a prohibition limited to speculative crypto trading.

Saqib did not say that Usmani had revised his position following the meeting. Instead, he called for continued engagement among religious scholars, regulators and industry experts as Pakistan develops its approach to emerging financial technology.

The dispute has direct implications for Pakistan’s developing crypto framework. The country’s parliament passed the Virtual Assets Act in March, making PVARA a permanent federal regulator with powers to license exchanges, custodians and token issuers.

Firms seeking licenses must ensure their services comply with Sharia law under the guidance of a committee of Islamic finance scholars. That process could allow regulators to distinguish between instruments such as unbacked cryptocurrencies, fiat-backed stablecoins and tokenized securities — the distinction Saqib emphasized following Saturday’s meeting.

The fatwa, by contrast, treated USDT alongside other crypto tokens when assessing whether cryptocurrency constitutes recognizable wealth. The disagreement therefore turns partly on whether products using blockchain infrastructure can be separated according to their underlying assets and economic functions for the purposes of Islamic finance.

Pakistan has rapidly expanded its digital asset plans since early 2025. PVARA previously invited regulated international crypto firms to apply for local licenses, citing an estimated 40 million users in the country.

Binance and HTX received preliminary clearances in December, although neither clearance permitted the exchanges to begin operating. The Finance Ministry also signed a non-binding agreement for Binance to advise on tokenizing up to $2 billion in sovereign bonds, treasury bills and commodity reserves.

Saqib has separately said Pakistan plans to launch a sovereign stablecoin, while the government previously announced plans for a state-held bitcoin reserve and allocated 2,000 megawatts of electricity for bitcoin mining and artificial intelligence data centers.

Saturday’s discussion signals that the religious classification of those products may become an important part of how, and whether, those initiatives proceed.