In a significant development for Pakistan’s cryptocurrency landscape, Islamic scholar Mufti Taqi Usmani has denounced the use of digital currencies under Islamic law. This stance was further solidified by the Pakistan Virtual Assets Regulatory Authority (PVARA) chairman, Bilal bin Saqib, who advocated for ongoing collaboration among regulators, scholars, and industry stakeholders in light of this pronouncement.
Is Cryptocurrency Shariah-Compliant?
Citing a recent religious ruling by Jamia Darul Uloom Karachi, Usmani along with five other scholars determined that cryptocurrencies, including stablecoins like USDT, are inconsistent with Shariah law. Their main contention lies in the perception that digital currencies lack the legal status of money or wealth in Islam. This ruling has sparked a considerable amount of discourse given Usmani’s prominence in Islamic jurisprudence.
Bilal bin Saqib, while not outright disputing the scholars’ decision, has called for a comprehensive evaluation of digital technologies. He underscored that cryptocurrencies encompass diverse categories and should not be uniformly judged by a singular legal decision.
Bilal bin Saqib remarked that the evolving nature of blockchain and digital assets necessitates a nuanced understanding rather than broad decrees.
Can Regulatory Policies Satisfy Religious Concerns?
With over 96% of Pakistan’s populace practicing Islam, these religious opinions could significantly influence regulatory approaches. The country is witnessing a shift towards regulated crypto markets, highlighted by the State Bank of Pakistan’s decision to permit banking services for certain virtual asset service providers as of April 2024. This marks a departure from the earlier blanket ban on banks engaging with the crypto industry.
The transition was facilitated by the Virtual Assets Act 2026, which designated the PVARA to spearhead the regulatory framework for virtual assets in Pakistan. This legislative move aims to create a secure and legally sound environment for digital financial activities. Notable milestones include:
- Permitting bank accounts for licensed VASPs as of April 15, 2024.
- The establishment of PVARA through the Virtual Assets Act in March 2026.
Efforts are underway to harmonize regulatory ambitions with Shariah compliance, likely leading to further negotiations between crypto industry players and Islamic authorities to ensure both financial security and adherence to religious doctrines.
