Pakistan's efforts to position itself as a hub for digital assets have encountered a major challenge after one of the country's most influential Islamic scholars declared cryptocurrency trading "haram" (forbidden) under Islamic law.
Fatwa against cryptocurrency
Mufti Muhammad Taqi Usmani, a globally respected authority on Islamic finance, issued a non-binding fatwa stating that cryptocurrencies such as Bitcoin, Ethereum and stablecoins fail to meet the requirements of legitimate wealth under Sharia. According to the ruling, digital assets involve excessive uncertainty (gharar), speculative behaviour and gambling-like elements (maysir), making them impermissible for trading and investment.
A fatwa is a religious opinion issued by a qualified Islamic scholar rather than a legally enforceable order. While it does not change Pakistan's laws, Mufti Usmani's influence means his views carry significant weight among Muslim investors, particularly in Pakistan and other Muslim-majority nations.
Crypto push faces setback
The ruling comes at a sensitive time for Islamabad, which has spent the past year promoting itself as a crypto-friendly destination. The government has established the Pakistan Crypto Council, introduced the Pakistan Virtual Assets Regulatory Authority (PVARA), and worked on policies aimed at regulating digital assets and encouraging blockchain innovation.
Despite the religious ruling, cryptocurrency trading has not become illegal in Pakistan. The country's regulatory framework remains separate from religious guidance, and the fatwa does not amount to a government ban or court order.
Impact on investor sentiment
However, market participants reported that the announcement prompted some religious investors in Pakistan, as well as in India and the United Arab Emirates, to liquidate their cryptocurrency holdings. Industry experts warned that the impact could widen if more Islamic scholars endorse similar positions.
Although the fatwa has not triggered a broad global cryptocurrency sell-off, analysts believe it could influence investor sentiment across Muslim-majority countries. Supporters of digital assets argue that stronger regulation, rather than prohibition, is the most effective way to address concerns surrounding fraud, money laundering and consumer protection while encouraging financial innovation.
