An influential Islamic seminary ruled that cryptocurrency trading is not permissible under Sharia law
Pakistan’s ambitious push to position itself as a regional cryptocurrency hub has run into a major obstacle after one of the country’s most respected Islamic seminaries declared cryptocurrency trading “haram“, or forbidden under Islamic law, triggering anxiety among investors and complicating Islamabad’s digital asset strategy.
The religious ruling was issued by Mufti Muhammad Taqi Usmani, one of the world’s leading scholars on Islamic finance, through Jamia Darul Uloom Karachi. The fatwa states that cryptocurrencies—including stablecoins in their current form—do not qualify as legitimate wealth or property under Sharia principles and therefore should not be traded or used as a medium of exchange.
The timing is particularly significant. Pakistan has spent recent months accelerating efforts to regulate virtual assets, develop a licensing framework for crypto exchanges and promote blockchain-based financial services as part of a broader digital economy strategy. The religious decree now threatens to slow adoption, especially among investors who closely follow Islamic financial guidance.
The Pakistan Virtual Assets Regulatory Authority (PVARA) has sought clarification from the seminary, arguing that not all digital assets should be treated alike. Regulators say blockchain-based products backed by tangible assets—such as gold-backed tokens or tokenised Islamic bonds (sukuk)—may warrant separate consideration under Islamic finance principles.
Market analysts believe the ruling could dampen confidence beyond Pakistan, particularly in Muslim-majority markets where religious opinions often influence financial decisions. While trading volumes have not yet seen a dramatic decline, some investors have reportedly begun reassessing their crypto holdings following the fatwa.
The episode highlights the growing intersection of technology, regulation and religious jurisprudence. As governments embrace digital assets, questions over their compatibility with traditional financial and ethical frameworks are likely to remain central to the global debate over cryptocurrency adoption.
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