Crypto and Religion: Pakistan Seeks the Best Compromise

Pakistan is still searching for its path. As the country accelerates on stablecoins, tokenization, and the issuance of licenses to crypto platforms, a highly publicized fatwa has called these ambitions into question. In response, the president of the Pakistan Virtual Assets Regulatory Authority (PVARA), Bilal bin Saqib, urges that each digital asset be examined individually in light of Islamic law, rather than condemning the entire sector.

Key Points

• A fatwa from Mufti Taqi Usmani deems cryptocurrencies incompatible with Sharia, including USDT.
• The president of PVARA calls for a separate analysis of stablecoins, tokenization, and other digital assets.
• The Virtual Assets Act already requires crypto actors to comply with the principles of Islamic finance.
• The outcome of the debate could condition several strategic projects in Pakistan, including a sovereign stablecoin.

A Fatwa Revives the Debate on Cryptocurrencies

The debate began with a fatwa published on June 10 by Mufti Taqi Usmani and several scholars from the Darul Ifta of Jamia Darul Uloom in Karachi. According to them, cryptocurrencies do not constitute a << maal >>, meaning a good or wealth recognized by Sharia. They are described as mere digital writings devoid of intrinsic value.

The religious opinion explicitly targets USDT as well as other cryptocurrencies. The authors go further by stating that purchasing physical goods or digital services paid for in crypto does not confer legitimate ownership to the buyer. In the examples studied, they recommend returning the purchased goods or deleting the obtained digital content.

In light of this position, Bilal bin Saqib asserts that he shares the desire to protect citizens from << fraud, exploitation, and financial harm >>, but refuses to categorize all blockchain technologies into a single category.

<< Blockchains, stablecoins, tokenized real-world assets, and other digital assets deserve thorough technical evaluation and rigorous examination in light of Sharia, rather than being viewed through a single lens. >> Bilal bin Saqib, president of the Pakistan Virtual Assets Regulatory Authority (PVARA)

The Future of Pakistan's Crypto Strategy in Question

The debate extends far beyond the religious question alone. Since the adoption of the Virtual Assets Act in March 2025, Pakistan has established a federal regulator responsible for issuing licenses to exchange platforms, custodians, and token issuers. All these activities must obtain Sharia compliance validation from a specialized committee.

This approach could allow for a distinction between speculative cryptocurrencies and stablecoins backed by fiat currencies, tokenized financial assets, or even digital bonds, precisely the distinction advocated by Bilal bin Saqib.

And the stakes are considerable. Pakistan is currently working on a sovereign stablecoin, a $2 billion tokenization project of public assets supported by Binance under a non-binding agreement, as well as issuing licenses to several crypto platforms.

The government has also announced the creation of a national Bitcoin reserve and the provision of 2,000 megawatts of electricity for Bitcoin mining and data centers dedicated to artificial intelligence.

The interpretation that prevails will directly impact these ambitions. If a strict reading of the fatwa were to prevail, some of these projects could face a religious obstacle. Conversely, an approach that differentiates stablecoins, tokenized assets, and unbacked cryptocurrencies would pave the way for a more nuanced development of digital assets in the country.