ISLAMABAD, July 13, 2026, 15:13 (PKT) – Pakistan's cryptocurrency regulatory body is navigating a religious controversy after a prominent Islamic scholar issued a fatwa declaring crypto purchases invalid under Sharia law. The dispute is complicating the country's evolving licensing framework for virtual assets.
Regulatory and Religious Crossroads
Bilal bin Saqib, chairman of the Pakistan Virtual Assets Regulatory Authority (PVARA), confirmed ongoing discussions with Mufti Taqi Usmani, following the fatwa that labeled cryptocurrencies as non-compliant with Islamic principles. Saqib emphasized that each token should be evaluated individually based on its design and use case, but Usmani has not softened his stance.
The timing is critical as rules for virtual-asset service providers remain in draft form. Companies are currently at the early No Objection Certificate (NOC) stage before they can apply for full licenses. The Virtual Assets Act, enacted in March, established a Shariah Advisory Committee and empowered PVARA to classify products by their function and economic impact, directly linking the religious debate to the regulatory process.
Differentiating Digital Assets
Saqib drew a clear distinction between unbacked cryptocurrencies, stablecoins pegged to fiat currencies, and tokenized real-world assets—digital representations of bonds or commodities on a blockchain. He stated that these categories deserve “careful technical assessment alongside rigorous Shariah examination, rather than being viewed through a single lens,” following his meeting with Usmani.
The fatwa, issued on June 10, was narrower than headlines suggesting a total crypto trading ban. It specifically addressed using crypto to purchase books and an online course, ruling those transactions invalid as crypto does not constitute maal (recognized wealth) under Islamic law. The ruling singled out Tether's USDT, describing crypto as “merely the recording of fictitious numbers in an account.”
Legal and Market Implications
A fatwa does not carry the force of law in Pakistan and cannot override legislation or court rulings. Its authority depends on voluntary adherence and the scholar's influence. This legal distinction allows PVARA to continue issuing licenses, but the business risk remains: state approval does not guarantee market acceptance or compliance with Islamic finance standards.
Pakistan's payment market is substantial, with workers sending home $41.6 billion in remittances for the fiscal year ending June 2026, an 8.6% increase year-over-year. June alone contributed $3.5 billion. The government has also partnered with a World Liberty Financial affiliate to explore using its dollar-linked USD1 stablecoin for regulated cross-border payments and remittances.
Tokenization and Licensing Progress
Pakistan is seeking Binance's assistance to tokenize up to $2 billion worth of sovereign bonds, Treasury bills, and commodity stocks. Both Binance and HTX have received initial approval for license applications. The targeted assets represent approximately 4.8% of the country's annual remittance flows, a factor that could influence launch timing and partner investment decisions amid regulatory uncertainty.
Formalizing the digital asset ecosystem is proving challenging. Officials estimate that around 40 million Pakistanis already use digital assets, predominantly through informal or unregulated channels. The State Bank of Pakistan permits limited-purpose accounts for NOC holders and full transactional accounts for licensed providers, but still prohibits banks from investing, trading, or holding virtual assets with their own funds or client deposits. A slow licensing rollout could drive more activity offshore, undermining tax collection, anti-money laundering efforts, and consumer protection.
Outlook and Next Steps
The regulatory outcome remains uncertain. PVARA may adopt a product-by-product approach, potentially treating fully backed stablecoins and asset-backed tokens differently from unbacked cryptocurrencies. However, if the Shariah Advisory Committee adopts the fatwa's reasoning against USDT, exchanges could face a narrower range of tokens, delayed product launches, and reduced retail interest—even for compliant services. Further discussions are planned, but no agreement has been reached.
The critical next steps are regulatory: final licensing rules, Shariah committee guidance, and separate decisions on stablecoins and tokenized government assets are all pending. Without these, an NOC merely secures a place in the licensing queue, not approval for Pakistan's digital finance products or real market traction.