Pakistan Regulator Urges Case-by-Case Sharia Review of Crypto Amid Controversial Fatwa

Pakistan’s leading crypto regulator has advocated for a nuanced, case-by-case evaluation of digital assets under Islamic law, responding to a recent religious ruling that declared cryptocurrency-based transactions invalid.

Bilal bin Saqib, Chairman of the Pakistan Virtual Assets Regulatory Authority (PVARA), announced on Saturday that he held a “constructive discussion” with renowned Islamic scholar Mufti Taqi Usmani regarding the Sharia compliance of blockchain-based technologies. The meeting followed the June 10 issuance of a fatwa by Usmani and other scholars from Darul Ifta at Jamia Darul Uloom Karachi, which broadly rejected the legitimacy of cryptocurrencies under Islamic jurisprudence.

The fatwa asserted that cryptocurrencies—including stablecoins like USDT—do not constitute “maal” (wealth) in Sharia terms, labeling them as “fictitious numerical entries.” It further ruled that purchases made using crypto, whether for physical goods like books or digital services such as online courses, are invalid. Buyers were instructed to return physical items and delete digital content, as they did not acquire lawful ownership.

Saqib emphasized that diverse digital asset categories—such as blockchains, stablecoins, and tokenized real-world assets—should not be judged uniformly. “They merit careful technical assessment alongside rigorous Shariah examination, rather than being viewed through a single lens,” he stated in a post on X (formerly Twitter).

While Saqib did not indicate that Usmani had altered his stance, he underscored the need for ongoing dialogue among religious authorities, regulators, and industry stakeholders as Pakistan shapes its digital asset policy.

This debate directly impacts Pakistan’s evolving regulatory landscape. In March 2025, the National Assembly passed the Virtual Assets Act, establishing PVARA as a permanent federal regulator empowered to license exchanges, custodians, and token issuers. Crucially, applicants must demonstrate Sharia compliance through guidance from an Islamic finance scholars’ committee—a process that could enable differentiated treatment of asset types, aligning with Saqib’s position.

The fatwa’s blanket classification of all crypto tokens—including fiat-backed stablecoins—as non-Sharia-compliant stands in contrast to the regulator’s push for granular analysis based on underlying assets and economic functions.

Pakistan has accelerated its digital asset initiatives since early 2025. PVARA has invited regulated international firms to seek local licenses, citing an estimated 40 million domestic users. Major exchanges Binance and HTX received preliminary clearances in December, though operational permissions remain pending. Additionally, the Finance Ministry signed a non-binding agreement with Binance to explore tokenizing up to $2 billion in sovereign bonds, treasury bills, and commodity reserves.

Saqib has also revealed plans for a sovereign stablecoin, while the government previously announced intentions to hold bitcoin reserves and allocated 2,000 megawatts of electricity for bitcoin mining and AI data centers.

Saturday’s discussion signals that religious rulings will play a pivotal role in determining the feasibility and design of these ambitious projects.

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