Pakistan's cryptocurrency ambitions face a major challenge after top Islamic scholar Mufti Muhammad Taqi Usmani declared Bitcoin, Ethereum, USDT and other digital assets 'haram', despite the government's push to regulate the crypto industry.
Islamabad: Pakistan's ambition to become a regulated cryptocurrency market has encountered a significant challenge after renowned Islamic scholar Mufti Muhammad Taqi Usmani issued a fatwa declaring cryptocurrency trading impermissible under Shariah law.
The ruling, released by Darul Uloom Karachi, one of Pakistan's most respected Sunni Islamic seminaries, states that cryptocurrencies, crypto tokens and stablecoins do not fulfil the Islamic definition of legitimate wealth or property. As a result, their buying, selling and trading are considered prohibited under Islamic law.
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Although the fatwa does not carry legal force, it is expected to influence public opinion in Pakistan, where religious guidance issued by senior Islamic scholars often plays an important role in shaping financial and personal decisions.
What does the fatwa say?
According to Darul Uloom Karachi, the ruling applies broadly to all forms of digital assets rather than specific cryptocurrencies.
The seminary said different terms such as cryptocurrency, virtual currency, crypto token and stablecoin refer to essentially the same category of digital assets. Simply changing the terminology, it said, does not change the religious ruling.
The fatwa therefore covers:
- Bitcoin (BTC)
- Ethereum (ETH)
- USDT (Tether)
- Other stablecoins
- Blockchain-based utility tokens
- Crypto investment tokens
- Virtual currencies used for trading or investment
The seminary argued that these assets do not qualify as recognised wealth under Shariah principles, making their commercial exchange impermissible.
According to the institution, several other Islamic scholars have also endorsed the ruling.
Why is this significant?
The timing of the fatwa is particularly notable because it directly contrasts with Pakistan's recent policy direction.
Over the past year, the Pakistani government has increasingly embraced cryptocurrency regulation instead of prohibition.
Rather than banning digital assets, Islamabad has sought to establish legal oversight, improve investor protection and encourage blockchain-based innovation.
As part of this effort, the government announced the creation of the Pakistan Virtual Assets Regulatory Authority (PVARA).
The authority is expected to:
- License cryptocurrency exchanges
- Regulate digital asset businesses
- Develop compliance standards
- Encourage blockchain innovation
- Integrate virtual assets into Pakistan's financial ecosystem
- Build a formal regulatory framework for crypto-related businesses
Officials have presented these reforms as part of Pakistan's broader digital economy strategy aimed at attracting investment, creating technology jobs and modernising financial services.
The latest religious ruling therefore creates a visible divide between the government's economic ambitions and influential religious opinion.
Government sees opportunity in crypto
Pakistan has increasingly recognised the rapid global expansion of blockchain technology and cryptocurrencies.
Like many developing economies, the country has explored digital assets as a way to:
- Promote financial innovation
- Encourage technology startups
- Attract foreign investment
- Develop blockchain infrastructure
- Improve digital financial services
The government has also been working on legal frameworks intended to bring cryptocurrency activity into the regulated financial system instead of allowing it to operate in legal uncertainty.
Supporters argue that regulation offers greater transparency, consumer protection and oversight while allowing innovation to continue.
Why does the fatwa matter if it is not legally binding?
A fatwa is a religious opinion issued by a qualified Islamic scholar interpreting Islamic law.
Unlike a court judgment or government legislation, it is not legally enforceable.
However, in countries such as Pakistan, where religion strongly influences public life, fatwas issued by highly respected scholars often carry substantial moral and social authority.
Mufti Muhammad Taqi Usmani is widely regarded as one of the world's leading experts in Islamic jurisprudence and Islamic finance. His opinions are frequently referenced by Islamic financial institutions, scholars and banks across several countries.
Because of his standing, the latest ruling could affect how many Pakistani Muslims view cryptocurrency investment, regardless of the government's regulatory position.
A growing debate within Islamic finance
The ruling also highlights an ongoing global debate among Islamic scholars regarding digital assets.
Some scholars argue that cryptocurrencies involve excessive uncertainty, speculation or lack the characteristics of tangible wealth required under Shariah.
Others maintain that properly regulated digital assets may be permissible if they function as legitimate stores of value or mediums of exchange and comply with Islamic financial principles.
As cryptocurrency adoption expands across Muslim-majority countries, differing religious interpretations have emerged, with some jurisdictions taking a more accommodating approach than others.
Pakistan's latest fatwa is likely to add fresh momentum to that debate.
What happens next?
The religious ruling does not automatically change Pakistan's cryptocurrency regulations or halt the government's plans to regulate the sector.
However, it could influence public participation in cryptocurrency markets and shape future discussions between policymakers, financial regulators and religious scholars.
With Islamabad continuing to promote a licensed virtual asset industry while influential clerics discourage cryptocurrency trading on religious grounds, Pakistan now faces the challenge of balancing technological innovation with the views of one of the country's most influential religious institutions.
How this tension evolves could play an important role in determining the future of cryptocurrency adoption and regulation in Pakistan.
Published: 12 Jul 2026, 11:51 am IST
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