Pakistan Crypto Regulator Clashes With Top Islamic Scholar Over Stablecoin Ban

Published by James Harris on July 13, 2026July 13, 2026

Pakistan’s crypto regulator is in a direct collision with one of Islamic finance’s most influential scholars, and the outcome will determine whether 30 to 40 million Pakistani cryptocurrency owners operate inside or outside the country’s new legal framework.

Bilal bin Saqib, Chairman of the Pakistan Virtual Assets Regulatory Authority (PVARA), met on July 11 with Mufti Taqi Usmani following a fatwa issued June 10 by scholars at Darul Ifta, Jamia Darul Uloom Karachi, declaring that cryptocurrency purchases are prohibited under Islamic law. The ruling concluded that crypto tokens do not qualify as “maal,” the Islamic legal concept of wealth, describing them instead as fictitious numerical entries. USDT was named explicitly alongside other tokens. Saqib described the meeting as a “constructive discussion” on X, but was clear that Usmani had not changed his position.

The practical stakes are immediate. Pakistan’s Virtual Assets Act, passed in March 2026, legally requires that licensed digital asset services receive Sharia approval from a committee of Islamic finance scholars. That committee structure was Saqib’s intended bridge between crypto adoption and religious compliance. The fatwa, by treating fiat-backed stablecoins and speculative tokens as a single prohibited category, collapses that bridge before it is built.

Where the Regulator’s Argument Lives or Dies

Saqib’s response is essentially a taxonomic argument: a blockchain, a fiat-backed stablecoin, and a tokenized real-world asset are not the same instrument and should not receive identical treatment. Each deserves, in his words, “careful technical assessment alongside rigorous Shariah examination.” This is a reasonable regulatory position. It is also the position that the fatwa explicitly preempts, stating that labeling something a “virtual currency,” “token,” or “stablecoin” does not change its prohibited status.

The scholars were asked to rule on a concrete scenario: books and an online course purchased with cryptocurrency. They ruled the purchases invalid, the buyer never legally took possession, and the correct remedy was returning the books and deleting the course materials rather than passing them on. This is not a ruling about speculative trading. It covers everyday transactions, which makes it structurally incompatible with any licensing regime designed to normalize crypto as a payment or savings instrument.

A Familiar Fault Line in a New Jurisdiction

The tension between Islamic finance principles and crypto assets is not new, but Pakistan’s situation is unusually high-stakes because the conflict is now embedded in statute rather than left to individual interpretation. Malaysia and the UAE have both navigated Sharia-compliance questions for digital assets, generally by treating asset-backed tokens differently from unbacked speculative coins and by establishing dedicated Sharia advisory boards with binding authority. The committee structure Saqib is defending mirrors that approach. The difference is that in Pakistan, a prominent scholar has issued a ruling before the committee framework has had a chance to operate, creating a public precedent that will be difficult to walk back regardless of what the committee later decides.

Usmani is not a peripheral figure. He is among the most cited authorities in global Islamic finance, and his opinions carry weight well beyond Pakistan’s borders. A softened or differentiated ruling from him would matter enormously. Saqib did not indicate that was forthcoming.

What the Licensing Regime Now Has to Absorb

PVARA’s licensing framework, which carries penalties of up to 50 million Pakistani rupees (approximately $179,000) plus prison time for unlicensed operation, was designed to bring structure to a market that already has tens of millions of participants. That market exists with or without Sharia approval. The fatwa does not make crypto illegal under Pakistani civil law. What it does is create a compliance problem for any licensed firm trying to clear the religious approval requirement, particularly if stablecoins like USDT remain categorically prohibited.

Saqib’s call for “ongoing communication between researchers and regulators” as Pakistan finalizes its rules is the only available diplomatic path. Whether Usmani’s scholars are willing to differentiate between a tokenized government bond and an unbacked altcoin, on the record and in a form that satisfies the licensing committee, is the question the entire framework now hangs on.