- Mufti Muhammad Taqi Usmani ruled cryptocurrency haram under Islamic law in Pakistan
- The fatwa states cryptocurrency is not recognised as valid wealth or payment under Shariah
- Pakistan is formalising crypto with licences and exploring tokenised state assets
As Pakistan focuses on efforts to regulate and promote the cryptocurrency sector by building a framework for virtual assets, a prominent Islamic scholar has released a fatwa stating that dealing in digital currency is haram under Islamic law. The religious ruling, issued by Islamic scholar Mufti Muhammad Taqi Usmani through a prominent Sunni Islamic seminary, Darul Uloom, in Karachi, casts doubt on the government's rapid embrace of crypto in the Islamic nation of more than 240 million people.
Pakistan has long ranked among the world's largest crypto markets by retail activity. Islamabad has moved fast to formalise that demand, exploring tokenised state assets and advancing licences for crypto exchanges that are expected to be issued in the coming months.
The digital currency has also helped Islamabad in cozying up to the Donald Trump administration in Washington. Pakistan has signed a deal with an affiliate of World Liberty Financial, the main crypto business of the US president's family, to explore using its $1 stablecoin for cross-border payments, part of what Islamabad calls "crypto diplomacy."
The Crypto 'Fatwa'
The fatwa was issued by a group of religious scholars at the Jamia Darul Uloom Karachi seminary, including a leading authority in Islamic finance, Mufti Muhammad Taqi Usmani. It was issued in response to a query about paying for books and an online course with crypto.
The Jamia Darul Uloom Karachi seminary, whose rulings carry wide influence among Muslims well beyond Pakistan, ruled in June that, as of now, cryptocurrency is not wealth under Islamic law, and therefore not a valid means of payment.
While the ruling does not carry legal force, the seminary has claimed that its ruling enjoys support from several other Islamic scholars.
The Concerns
Experts have pointed out that the edict, as it stands, could become "a hurdle to broader, bank-led crypto adoption beyond Pakistan's urban trading community.
"So far, however, crypto trading volumes have appeared unaffected," Waqas Ghani, head of research at JS Global Capital, a Pakistani brokerage and investment banking firm, told news agency Reuters while expressing his concerns.
Pakistan's virtual assets regulator has also asked the Islamic seminary to draw a distinction between speculative cryptocurrencies and asset-backed digital tokens.
A Plea For Religious Regulation
Bilal bin Saqib, chairman of the Pakistan Virtual Assets Regulatory Authority (PVARA), told Reuters he had asked for the clarification after the seminary ruled last month that crypto-based purchases were not permissible under Islamic law.
Saqib said the regulator is in discussions with the seminary to assess digital assets by category, not as a single class.
"The central question the fatwa raises is whether a digital asset constitutes recognised wealth under Shariah (Islamic law). That is precisely the right question, and it is why these instruments must be examined individually," he said.
A blockchain-recorded sukuk, or Islamic bond, represents ownership of a real, income-generating asset, he said, while gold-backed tokens or fully reserved stablecoins carry an enforceable claim on something tangible and redeemable.
Blockchain itself is "a record-keeping and verification technology, not a financial asset," Saqib added.
He said that purely speculative tokens with no underlying asset are a separate matter, and "the scholars' concerns there must be taken seriously."
"We will continue working closely with our scholars as Pakistan develops its licensing framework and advances work on stablecoins and real-world asset tokenisation," he said.
"Pakistan has the opportunity to lead the world in Shariah-compliant digital finance, and that leadership must be built with our scholars."
