Pakistan is home to roughly 40 million crypto users — the third-largest base in the world — and its regulators are now navigating a collision course between digital finance ambition and Islamic legal authority. At the heart of this tension sits a fatwa issued on June 10 that declared digital asset payments, including stablecoins like USDT, impermissible under Islamic law. For a country building one of the more ambitious crypto regulatory frameworks in the developing world, that ruling is not a minor footnote.
Summary
Key takeaways
- A fatwa issued on June 10 declared digital asset payments, including USDT and other stablecoins, impermissible under Islamic law in Pakistan.
- The fatwa classifies digital assets as failing to qualify as legitimate wealth (maal) under Shariah.
- PVARA Chairman Bilal Bin Saqib met globally respected Islamic scholar Mufti Muhammad Taqi Usmani around July 11 to explore a path toward Shariah-compliant digital asset frameworks.
- Pakistan’s Virtual Assets Act 2026, passed in March, established PVARA and mandated a Shariah Advisory Committee to address exactly these tensions.
- No immediate market impact on crypto token prices was reported following the fatwa or the meeting.
Islamic Ruling Declares Digital Asset Payments Impermissible
The June 10 fatwa was direct in its scope. It specifically targeted the use of digital assets to purchase goods and services, naming stablecoins like USDT as failing a foundational test of Islamic jurisprudence. Under Shariah, for something to function as a legitimate medium of exchange or store of value, it must qualify as maal — recognized wealth. Digital assets, according to the ruling, do not clear that bar.
That classification carries real weight in Pakistan. With a Muslim-majority population exceeding 230 million, religious rulings on financial matters have historically shaped behavior across banking, lending, and commerce. A blanket prohibition on digital asset payments — even if not immediately enforced as law — shapes public trust, merchant adoption, and the willingness of institutions to engage with crypto infrastructure.
Why the maal classification matters
The concept of maal is not a technicality. Under Islamic finance principles, only assets meeting this standard can be lawfully bought, sold, or used in transactions. By ruling that digital assets do not qualify as maal, the fatwa effectively places crypto payments outside the boundary of permissible commerce — a categorically different conclusion than simply calling them risky or unregulated.
This matters especially for stablecoins. USDT, designed specifically to behave like a dollar-pegged currency and widely used for cross-border payments, was explicitly named. That singling-out signals the ruling was not directed at speculative tokens alone, but at the transactional use of crypto more broadly.
Regulatory Response and Dialogue Efforts
Pakistan’s crypto regulation chief did not retreat from the ruling — he went directly to one of the scholars who shapes it. Around July 11, PVARA Chairman Bilal Bin Saqib met with Mufti Muhammad Taqi Usmani, widely regarded as one of the most influential Islamic finance scholars alive, to open a conversation about how digital assets might be assessed through a Shariah lens rather than dismissed outright.
Saqib’s approach was measured. Rather than pushing back against the fatwa publicly, he framed the path forward as one requiring continuous dialogue between regulators, Islamic scholars, and industry participants. The goal, as he articulated it, is to ensure blockchain technologies and digital assets get a proper, informed assessment for Shariah compliance — not a reflexive prohibition.
Mufti Usmani’s standing in Islamic finance
The choice of interlocutor matters enormously here. Mufti Muhammad Taqi Usmani is not a peripheral figure in this debate. He has spent decades shaping the global architecture of Shariah-compliant banking, contributing to international standards that govern Islamic finance across multiple countries. When he engages on a topic, the outcome tends to influence far beyond Pakistan’s borders. His willingness to meet with PVARA’s leadership is itself a signal that the door to accommodation has not been closed.
The path toward Shariah-compliant frameworks
PVARA’s stated aim is to build digital asset frameworks that can satisfy both regulatory requirements and Islamic legal principles. That ambition is significant — and genuinely difficult. It requires not just technical compliance, but a rethinking of how digital assets are structured, valued, and traded in ways that Islamic scholars would recognize as legitimate. The regulator has signaled it intends to keep that conversation open rather than force a resolution prematurely.
Pakistan’s Crypto Market and Regulatory Framework
The stakes of getting this right are substantial. Pakistan ranks third globally in crypto adoption according to the 2025 Chainalysis Global Crypto Adoption Index, with an estimated 40 million users engaged in digital assets as of mid-2026. That is roughly one in six Pakistanis — a user base larger than most countries’ entire populations.
Against that backdrop, the Virtual Assets Act 2026, passed in March, established PVARA as a permanent federal authority with full licensing powers over virtual asset service providers. The law was forward-looking in one particular respect: it explicitly mandated the creation of a Shariah Advisory Committee to address Islamic legal concerns related to digital assets. That provision suggests legislators saw this collision coming and built in a mechanism to manage it.
In April, the State Bank of Pakistan extended another piece of the puzzle, permitting licensed virtual asset service providers to open bank accounts. For years, Pakistani crypto businesses had operated in a gray zone, cut off from formal banking infrastructure. That change pulls regulated crypto activity into the mainstream financial system — making the question of Shariah compliance more urgent, not less, because mainstream use demands mainstream legitimacy.
Market Reaction and What Comes Next
No immediate impact on crypto token prices was reported in the wake of either the fatwa or the July 11 meeting. That muted reaction reflects the reality that Pakistan’s regulatory process, while consequential domestically, has not yet triggered cross-market volatility.
But the Shariah Advisory Committee, once fully constituted and operational, will be the body to watch. Its rulings on which digital assets or structures might qualify under Islamic law could carry more practical significance for Pakistan’s 40 million crypto users than any conventional regulatory guideline. A favorable determination on even a subset of digital assets — say, certain tokenized instruments or Shariah-redesigned stablecoins — could reshape how the market operates in one of the world’s largest crypto communities.
What Saqib’s outreach to Mufti Usmani makes clear is that Pakistan’s Pakistan crypto regulation strategy is not moving toward confrontation with Islamic legal authority. It is moving toward negotiation. Whether that negotiation produces a workable framework — one where digital assets can be structured to meet the maal standard — will define whether Pakistan’s massive user base can fully integrate into the global crypto economy, or whether a significant portion of it remains in a legally ambiguous space.
FAQ
What did the June 10 fatwa declare about digital asset payments in Pakistan?
The fatwa declared digital asset payments, including stablecoins like USDT, impermissible under Islamic law, classifying them as not qualifying as legitimate wealth (maal) under Shariah — meaning they cannot be lawfully used to purchase goods or services.
Who is Mufti Muhammad Taqi Usmani and what is his role in this context?
Mufti Muhammad Taqi Usmani is one of the world’s most influential Islamic finance scholars, having helped shape Shariah-compliant banking standards across multiple countries. He met with PVARA Chairman Bilal Bin Saqib around July 11 to discuss the Shariah compliance of digital assets in Pakistan.
What is the Virtual Assets Regulatory Authority (PVARA)?
PVARA is Pakistan’s federal regulatory body for digital assets, established under the Virtual Assets Act 2026 passed in March. It holds licensing powers over virtual asset service providers and is mandated to maintain a Shariah Advisory Committee to address Islamic legal questions related to digital assets.
How does Pakistan rank in global crypto adoption?
Pakistan ranks third globally in crypto adoption according to the 2025 Chainalysis Global Crypto Adoption Index, with approximately 40 million users engaged in digital assets as of mid-2026.
Article produced with the assistance of artificial intelligence and reviewed by the editorial team.
