Pakistan's top crypto regulator, Bilal bin Saqib, chairman of the Pakistan Virtual Assets Regulatory Authority (PVARA), has called for continued dialogue on the treatment of digital assets under Islamic law after meeting with the prominent scholar Mufti Taqi Usmani, who endorsed a ruling that prohibits purchases made with cryptocurrencies.
The meeting, held in Karachi, was part of PVARA's ongoing efforts to engage religious authorities as the country moves toward building a regulated crypto market. In a statement posted on social media on Saturday, Saqib said the discussion covered a wide range of topics, including blockchain technology, digital assets, stablecoins, tokenized real-world assets (RWAs), and the importance of protecting Pakistanis from fraud, exploitation, and financial harm.
Saqib emphasized that different categories of digital assets require careful technical assessment alongside rigorous Shariah examination, rather than being viewed through a single lens. He expressed hope that ongoing dialogue would help scholars, regulators, and industry participants reach a better understanding of the distinctions between various types of digital assets.
Background of the ruling
The ruling in question was issued by Jamia Darul Uloom Karachi, one of Pakistan's most influential Islamic seminaries. It was signed by Mufti Taqi Usmani and five other scholars. According to local newspaper Dawn, the ruling declared that purchases made with cryptocurrencies, including stablecoins such as USDT, are not permitted under Islamic law because digital tokens do not qualify as recognized property or wealth according to their interpretation of Shariah.
Usmani is a globally respected Islamic scholar known for his expertise in Islamic finance. His opinions carry enormous weight in Pakistan, where approximately 231.7 million people—96.35% of the population—identified as Muslim in the 2023 census. Religious rulings from Jamia Darul Uloom Karachi often influence public behavior and even government policy.
Saqib did not directly challenge the ruling but instead called for nuanced examination. He noted that blockchain technology and digital assets encompass a broad spectrum of technologies and use cases, ranging from decentralized finance (DeFi) to tokenized assets backed by real-world value. He argued that each category merits its own Shariah assessment.
Pakistan's evolving crypto landscape
The discussion comes at a critical time for Pakistan's cryptocurrency sector. For years, the State Bank of Pakistan maintained a restrictive stance, effectively prohibiting regulated financial institutions from dealing with crypto-related businesses. However, that changed in April 2026, when the central bank issued a circular allowing banks to open accounts for virtual asset service providers (VASPs) licensed by PVARA. This ended an eight-year restriction on institutional engagement with digital assets.
The policy shift followed the passage of Pakistan's Virtual Assets Act 2026 in March, which established PVARA as the statutory body responsible for licensing and oversight of virtual asset activities. The law gave PVARA authority to regulate exchanges, custodians, and other service providers, creating a legal framework that many in the industry hope will attract investment and foster innovation.
Despite these regulatory advancements, religious opposition remains a significant hurdle. Islamic scholars have raised concerns about the speculative nature of cryptocurrencies, their potential for use in illegal activities, and their compliance with Shariah principles that prohibit riba (interest), gharar (excessive uncertainty), and maysir (gambling). Crypto advocates argue that blockchain technology itself is neutral and that properly structured digital assets can adhere to Islamic finance rules.
Stablecoins and tokenized assets under scrutiny
The ruling specifically mentioned stablecoins like USDT, which are designed to maintain a stable value by pegging to fiat currencies, typically the U.S. dollar. From a Shariah perspective, stablecoins raise unique issues because their value derives from an underlying asset—often a currency that itself may not be backed by gold or tangible commodities. However, proponents point out that many Islamic finance instruments also rely on fiat currencies and that tokenized real-world assets—such as gold, real estate, or sukuk (Islamic bonds)—could offer Shariah-compliant alternatives.
Tokenized RWAs are gaining traction globally, including in the Islamic finance sector. For instance, in April 2026, the PUSD stablecoin deployed on the ADI Chain, targeting the $3 trillion Islamic finance market. This development illustrates how digital assets can be tailored to meet religious requirements, potentially bridging the gap between innovation and religious law.
Pakistan's PVARA has shown interest in promoting tokenized assets. Saqib has previously stated that the regulator aims to foster an ecosystem where digital assets are used for productive purposes, such as enabling remittances, facilitating trade finance, and providing access to financial services for the unbanked. Pakistan has a large diaspora and one of the highest remittance inflows in the world, making digital asset adoption particularly attractive.
The tension between innovation and tradition
The ongoing dialogue between PVARA and religious scholars reflects a broader tension facing many Muslim-majority countries: how to balance the benefits of financial innovation with the need to adhere to religious principles. Countries like the United Arab Emirates, Saudi Arabia, and Malaysia have taken proactive steps to integrate digital assets with Islamic finance, issuing guidelines and launching Shariah-compliant crypto products.
In Pakistan, the path forward remains uncertain. While the government appears committed to building a regulated crypto market, religious rulings could significantly shape public perception and adoption. Many Pakistanis are devout and likely to follow the guidance of respected scholars like Mufti Taqi Usmani. If the perception persists that all cryptocurrencies are haram (forbidden), demand could stagnate despite regulatory opening.
However, Saqib's call for nuanced discussion suggests that PVARA is not retreating from its pro-crypto stance. Instead, the regulator aims to engage scholars in a deeper exploration of digital assets, hoping to carve out room for certain categories—such as asset-backed tokens or utility tokens—that may be acceptable under Shariah. The involvement of scholars like Usmani in these discussions is promising, as it signals a willingness to engage rather than a blanket rejection.
Broader implications for the region
Pakistan's experience is being closely watched by other countries in South Asia and the broader Muslim world. If Pakistan can successfully create a Shariah-compliant crypto framework, it could serve as a model for other nations grappling with similar issues. Conversely, if the religious opposition remains intractable, it could slow adoption and push crypto activity into unregulated channels.
Regulators in neighboring India have also been cautious, with the Reserve Bank of India maintaining a skeptical stance for years, though recent court rulings and global trends have led to some softening. Bangladesh has similarly restricted crypto activity. The success of Pakistan's regulatory approach could influence policymakers across the region.
In addition to religious considerations, Pakistan faces practical challenges: low financial literacy, limited internet penetration in rural areas, and concerns about money laundering and terrorist financing. PVARA has been working with international bodies like the Financial Action Task Force (FATF) to ensure compliance with anti-money laundering standards. The regulator also plans to implement robust know-your-customer (KYC) and counter-terrorism financing (CTF) measures for all licensed VASPs.
The road ahead
Looking forward, PVARA is expected to continue meeting with religious scholars, industry leaders, and international experts. Saqib has indicated that the regulator will produce educational materials explaining the differences between various digital assets and their potential Shariah compliance. He also hinted at the possibility of developing specific guidelines for Shariah-compliant crypto products.
The dialogue between technology and religion is ancient, and the crypto world is just the latest arena. In Pakistan, where both technology adoption and religious observance are high, striking a balance will require patience, education, and mutual respect. Saqib's call for dialogue is a step in the right direction, but it remains to be seen whether scholars will find enough flexibility within Islamic jurisprudence to accommodate the rapidly evolving landscape of digital assets.
As the world increasingly moves toward tokenization and decentralized finance, Pakistan's approach could determine whether it becomes a hub for Islamic crypto innovation or lags behind due to religious constraints. For now, the conversation continues, with both regulators and scholars seeking common ground.
Source:Cointelegraph News