Pakistan’s Crypto Regulator Fights to Save Asset-Backed Tokens from a Total Ban

Internal Debates Over Shariah Compliance

Pakistan’s virtual assets regulator has asked the country’s most influential Islamic seminary to clarify the difference between speculative cryptocurrencies and asset-backed digital tokens, after a recent religious ruling cast uncertainty over Islamabad’s fast-moving crypto plans.

Bilal bin Saqib, chairman of the Pakistan Virtual Assets Regulatory Authority (PVARA), reportedly sought guidance from Jamia Darul Uloom Karachi after the seminary ruled last month that cryptocurrency-based purchases are not permissible under Islamic law. The fatwa has raised questions about the government’s efforts to formalize a booming market in a nation of more than 240 million people that ranks among the world’s largest retail cryptocurrency hubs.

The ruling has also highlighted disagreements within the seminary. According to Bloomberg, several clerics — including some involved in drafting the fatwa — differ on whether certain digital assets could qualify as wealth under Shariah, with some scholars arguing that asset-backed tokens or fully reserved stablecoins may be permissible. Others maintain that cryptocurrency remains too speculative to meet Islamic standards for lawful trade. The internal debate has added pressure on regulators seeking religious consensus as they build a national digital-asset framework.

Waqas Ghani, head of research at JS Global Capital, said in a Reuters report that the fatwa could hinder broader, bank-led cryptocurrency adoption beyond Pakistan’s urban trading community, though he noted that trading volumes have not yet been affected.

The fatwa was issued by several scholars, including Mufti Muhammad Taqi Usmani, a leading authority in Islamic finance. It followed an inquiry about paying for books and an online course with cryptocurrency. Bloomberg reported that some clerics involved in the deliberations believe further study is needed before issuing a definitive position on newer instruments, such as tokenized sukuk (Islamic bonds) or gold-backed tokens.

The PVARA chairman said his organization is working with scholars to evaluate digital assets by category rather than treating them as a single class. The key question, he said, is whether a digital asset qualifies as recognized wealth under Shariah.

Saqib said a blockchain-recorded sukuk represents ownership of a real, income-generating asset, while gold-backed tokens and fully reserved stablecoins carry enforceable claims on tangible, redeemable value. Blockchain, he added, is “a record-keeping and verification technology, not a financial asset.”

Speculative tokens with no underlying asset are a separate matter, and Saqib said scholars’ concerns “must be taken seriously.”

“We will continue working closely with our scholars as Pakistan develops its licensing framework and advances work on stablecoins and real-world asset tokenization,” he said. “Pakistan has the opportunity to lead the world in Shariah-compliant digital finance, and that leadership must be built with our scholars.”