Pakistan Virtual Asset Regulatory Authority (PVARA) Chairman Bilal bin Saqib, who also serves as Minister of State, transmitted the formal request to Jamia Darul Uloom Karachi, as reported by Dawn on July 15, following a meeting with leading Islamic finance scholar Mufti Muhammad Taqi Usmani four days earlier. The move puts Pakistan's crypto regulatory framework, anchored by the Virtual Assets Act 2026 signed into law in March of this year, in direct dialogue with a religious ruling that declared Bitcoin, Ethereum, USDT, and all digital tokens impermissible under Islamic law.

The Fatwa and What It Actually Says

On June 10, Darul Ifta, the seminary's religious edict office, issued a ruling signed by six scholars, led by Mufti Usmani and including his son Hassan. The ruling concluded that cryptocurrency does not qualify as maal, the Shariah concept of recognized wealth or property. Under classical Islamic jurisprudence, an asset must constitute maal to serve as a valid medium of exchange or subject of commercial transactions. The scholars concluded crypto fails this test, describing it as "merely the recording of fictitious numbers in an account" with no intrinsic substance, usufruct, or claim on a tangible asset.

The ruling is a religious opinion, not law. Pakistan's Virtual Assets Act 2026, signed by President Asif Ali Zardari on March 7, remains the operative legal framework. Regulated crypto activity is still permitted, and PVARA-licensed virtual asset service providers (VASPs) retain their licenses. Post-fatwa trading volumes showed no significant change, according to Dawn. The ruling nonetheless creates a legitimacy challenge for the broader adoption push the government has spent the past year building. Worth noting is that the Virtual Assets Act 2026 already embeds a Shariah Advisory Committee within PVARA's structure, a design choice that anticipated this kind of tension and establishes the regulator's clear institutional standing to engage the seminary directly.

What Saqib Is Asking For

Saqib's core argument is that the fatwa treats all digital assets as interchangeable when they are not. "Blockchain, digital assets, stablecoins, and tokenised real-world assets represent a broad spectrum of technologies and use cases," he told Mufti Usmani at the July 11 meeting, according to Dawn. He also framed blockchain itself as infrastructure rather than a financial product: "Blockchain itself is a record-keeping and verification technology, not a financial asset."

Three broad categories appear central to his argument. First, tokenized sukuk (Islamic bonds recorded on a blockchain), which represent fractional ownership of real, income-generating assets such as infrastructure or real estate. Second, fully reserved stablecoins and gold-backed tokens that carry enforceable claims on physical collateral. Third, purely speculative tokens like Bitcoin and most altcoins, where PVARA has acknowledged scholarly concerns have merit.

Mufti Usmani is not entirely closed to movement on this. He indicated his position could evolve if digital assets become widely used in real trade by actual economies, according to CryptoTimes.

Why the Stakes Are High

Pakistan ranks third globally in crypto adoption behind India and the United States, according to Chainalysis's 2025 Global Crypto Adoption Index, with an estimated 40 million users representing roughly 17 percent of the population. The country processes more than $38 billion in annual remittances. Separately, Pakistan's informal crypto market is estimated at roughly $25 billion, with USDT functioning as the de facto tool for freelancers and migrant workers who rely on stablecoins for cross-border payments. USDT was explicitly named as impermissible in the June ruling, and for those users the fatwa creates a religious legitimacy gap even where the activity remains legal.

The risk, according to Waqas Ghani, Head of Research at JS Global Capital, is at the bank level. "The edict could become a hurdle to broader, bank-led crypto adoption beyond Pakistan's urban trading community," he told Dawn. The State Bank of Pakistan only lifted its seven-year ban on banks serving crypto firms in April 2026, and those institutions may pull back from consumer-facing crypto products if caution over the fatwa's implications intensifies.

There is also a significant memorandum of understanding in the background. Pakistan signed an agreement with Binance in December 2025 to explore tokenizing state bonds, treasury bills, and commodity reserves. Whether that pipeline advances will depend, at least in part, on regulatory and religious legitimacy moving in the same direction.

Significance Beyond Pakistan

Mufti Usmani is among the most cited Islamic finance authorities in the world, a former judge on Pakistan's Federal Shariat Court who helped shape modern sukuk standards and halal banking products used across the Gulf, Southeast Asia, and Africa. His rulings carry weight well beyond Pakistan's borders.

Countries including Nigeria, Kenya, Bangladesh, and Indonesia, all major retail crypto markets with large Muslim populations, are expected to study the outcome closely. Gulf institutions in the UAE and Saudi Arabia are already exploring tokenized sukuk products that would benefit from clearer Shariah guidance on blockchain-recorded assets.

If Jamia Darul Uloom Karachi ultimately produces a category-differentiated ruling that validates asset-backed digital tokens while maintaining restrictions on speculative ones, it could be the most consequential government-aligned Shariah taxonomy of digital assets produced to date. Saqib put the ambition plainly: "Pakistan has the opportunity to lead the world in Shariah-compliant digital finance, and that leadership must be built with our scholars."

No timeline for the seminary's response has been reported.