Pakistan's crypto regulator has met with Islamic scholar Mufti Taqi Usmani after a fatwa declared cryptocurrency purchases impermissible under Islamic law.
This dialogue occurs as the country attempts to reconcile a new legislative framework with religious interpretations that could either legitimize or block the digital asset industry. The tension between legal regulation and religious prohibition creates significant uncertainty for investors and developers within the country.
The State Bank of Pakistan's virtual asset department initiated the meetings to ensure that any future cryptocurrency regulation complies with Shariah principles. Officials are seeking to address concerns regarding financial stability and the potential for illicit activity associated with digital currencies.
This religious ruling arrives amid a shifting legal landscape. Parliament passed the Virtual Assets Act in 2026 [1], suggesting a transition from a total crypto ban toward a regulated environment. This legislative move follows the establishment of a Crypto Council in March 2025 [2].
However, the fatwa issued by Usmani complicates the implementation of the Virtual Assets Act. While the government moves toward formal oversight, the religious decree maintains that purchasing these assets is haram. This contradiction leaves the regulatory framework in a state of flux as the government seeks a middle ground that satisfies both financial security requirements, and religious mandates.
The regulator said the goal is to create a framework that balances innovation with ethical and religious standards. The discussions in Islamabad aim to determine if specific types of digital assets or modified trading practices could align with Islamic law.
“A fatwa declared cryptocurrency purchases impermissible under Islamic law.”
The conflict between the Virtual Assets Act and the religious fatwa highlights the unique challenge Pakistan faces in integrating decentralized finance into a society where Shariah law carries significant weight. If the government cannot align its regulatory framework with the views of influential scholars like Mufti Taqi Usmani, the legal ability to trade crypto may exist on paper, but social and religious barriers could prevent widespread adoption and institutional growth.
