Pakistan's Crypto Regulator Seeks Clarification After Top Islamic Scholar Declares Cryptocurrencies 'Haram'

Pakistan's cryptocurrency ambitions face a major hurdle after influential Islamic scholar Mufti Muhammad Taqi Usmani and the Jamia Darul Uloom Karachi seminary issued a fatwa declaring digital assets 'haram' and not recognized wealth under Sharia. In response, Bilal bin Saqib, chairman of the Pakistan Virtual Assets Regulatory Authority (PVARA), met with Usmani to advocate for an asset-by-asset review rather than a blanket ban. While the non-binding ruling triggered localized selling among religious investors in Pakistan, India, and the UAE, PVARA continues to develop its licensing framework under the Virtual Assets Act 2026, which includes a stablecoin partnership with the Trump-linked World Liberty Financial.

Pakistan cryptocurrency regulation

• ▪The Virtual Assets Act, passed by Pakistan's Parliament in March 2026, established the Pakistan Virtual Assets Regulatory Authority as the federal body responsible for licensing and supervising virtual asset service providers
• ▪Pakistan has partnered with an affiliate of World Liberty Financial, a crypto business linked to United States President Donald Trump's family, to explore using its dollar-linked stablecoin for cross-border payments

Islamic finance Sharia compliance

• ▪Bilal bin Saqib, chairman of the Pakistan Virtual Assets Regulatory Authority, urged that blockchain networks, stablecoins, and tokenized real-world assets be evaluated individually under Sharia principles rather than as a single asset class
• ▪Islamic finance principles prohibit transactions involving excessive uncertainty, known as gharar, and elements akin to gambling or speculation, known as maysir

Religious investor market selloff

• ▪The fatwa triggered pockets of selling and liquidation of holdings by religious investors in Pakistan, India, and the United Arab Emirates, though the global cryptocurrency market did not experience a broad-based sell-off
• ▪Waqas Ghani, head of research at JS Global Capital, stated that while domestic crypto trading volumes appeared unaffected, the edict could become a hurdle to broader, bank-led crypto adoption in Pakistan

Muslim-majority countries crypto sentiment

• ▪Other Muslim-majority jurisdictions, including the United Arab Emirates, Bahrain, and Malaysia, have established regulatory frameworks to license digital asset exchanges and integrate Shariah oversight rather than rejecting digital assets outright
• ▪Analysts suggest the fatwa could influence investor sentiment in other countries with large Muslim populations if additional religious institutions endorse the ruling

Mufti Taqi Usmani fatwa

• ▪The religious ruling issued on June 10, 2026, stated that cryptocurrencies do not qualify as recognized wealth, or maal, under Islamic law and are merely fictitious numerical entries
• ▪The fatwa declared that using cryptocurrencies to purchase goods and services, such as books or online courses, does not constitute a valid transfer of ownership
• ▪Mufti Muhammad Taqi Usmani and scholars from Jamia Darul Uloom Karachi's Darul Ifta issued a fatwa declaring cryptocurrencies, including Bitcoin and Tether, impermissible or haram under Islamic law