Pakistan's rapidly growing cryptocurrency sector has been hit by a major religious and financial controversy after Mufti Muhammad Taqi Usmani, one of the country's most influential Islamic scholars, issued a fatwa declaring cryptocurrency trading impermissible under Islamic (Sharia) law. The ruling covers Bitcoin (BTC), Ethereum (ETH), USDT (Tether) and other digital assets, creating fresh uncertainty for Pakistan's efforts to develop a regulated crypto industry.
The fatwa was issued through Darul Uloom Karachi and signed by Mufti Taqi Usmani along with several other Islamic scholars. According to the ruling, cryptocurrencies do not meet the Islamic definition of "maal" (recognized wealth or property) and therefore cannot be considered a valid medium for buying, selling or investment under Sharia principles.
Why the fatwa was issued
The religious ruling argues that cryptocurrencies are largely speculative digital assets whose values fluctuate sharply without being backed by tangible assets. According to the scholars, because these digital tokens do not possess the characteristics required under Islamic commercial law, transactions involving them are considered non-permissible (haram) from a Sharia perspective.
The fatwa specifically includes popular cryptocurrencies such as:
- Bitcoin (BTC)
- Ethereum (ETH)
- USDT (Tether)
- Other cryptocurrencies and crypto tokens
The scholars also questioned the widespread speculative trading associated with digital currencies, saying excessive uncertainty and speculation conflict with Islamic financial principles.
Timing creates challenge for Pakistan
The ruling has come at a sensitive time because the Government of Pakistan has been actively working to regulate and promote the country's digital asset industry.
In recent months, authorities have introduced measures to establish a legal framework for virtual assets, license cryptocurrency businesses and encourage blockchain innovation. Pakistan has also expressed interest in becoming a regional hub for digital finance and Web3 technologies.
The fatwa therefore creates a direct challenge to these ambitions, particularly among investors who closely follow Islamic financial guidance.
Government seeks balanced approach
Following the controversy, officials associated with Pakistan's digital asset regulatory framework said the issue should be examined from both technical and Sharia perspectives.
Authorities indicated that while speculative cryptocurrencies have raised religious concerns, asset-backed digital tokens and blockchain-based financial products could potentially be evaluated differently if they comply with Islamic finance principles.
Regulators have also signalled their willingness to continue discussions with Islamic scholars in an effort to develop a Sharia-compliant digital asset framework rather than abandoning crypto regulation altogether.
Impact on investors
Although the fatwa is not legally binding, it carries considerable influence among many Muslims in Pakistan because of Mufti Taqi Usmani's standing as one of the country's most respected Islamic jurists.
Market observers believe the ruling could discourage some religious investors from participating in cryptocurrency markets and may temporarily reduce trading activity among conservative investors.
At the same time, financial analysts note that Pakistan already has millions of crypto users, and the long-term impact will depend on how regulators, scholars and the industry respond in the coming months.
Debate over Islamic finance and crypto
The controversy has reignited a global debate that extends beyond Pakistan.
Islamic scholars around the world remain divided over whether cryptocurrencies can comply with Sharia principles. While some scholars argue that highly speculative digital assets are impermissible, others believe certain blockchain-based financial products or asset-backed tokens could qualify if structured according to Islamic financial rules.
Because there is no single global Islamic authority governing cryptocurrency, different countries and scholars continue to issue differing opinions on the subject.
Pakistan's crypto future
Despite the fatwa, Pakistan's regulatory authorities have indicated that work on digital asset regulation will continue.
Officials are expected to consult religious scholars, technology experts and financial regulators before finalising future rules. Their objective is to create a framework that both supports innovation and remains consistent with Islamic financial principles.
Conclusion
The fatwa issued by Mufti Muhammad Taqi Usmani marks one of the most significant religious interventions in Pakistan's cryptocurrency sector to date. By declaring Bitcoin, Ethereum, USDT and similar cryptocurrencies impermissible under Sharia, the ruling has intensified debate over the future of digital assets in the country.
While the decision is expected to influence many investors, it does not automatically change Pakistan's legal framework for cryptocurrencies. The government continues to pursue crypto regulation and is now working to find a balance between technological innovation and compliance with Islamic financial principles.