Why Has Pakistan's Top Islamic Seminary Issued a Fatwa Declaring Cryptocurrency Trading Haram?

A prominent Islamic seminary in Karachi has issued a religious decree (fatwa) declaring cryptocurrency trading haram (forbidden under Islamic law), creating a significant hurdle for Pakistan’s rapidly expanding digital asset market. The ruling, led by renowned Islamic finance authority Mufti Muhammad Taqi Usmani at the Jamia Darul Uloom seminary, arrives just as the Pakistani government aggressively pushes to formalize the industry through new licensing frameworks and international digital partnerships.

The Crypto Decree and Investor Anxiety

The fatwa was issued by scholars at Jamia Darul Uloom Karachi in response to an inquiry regarding the use of digital currency to pay for online courses and books. The seminary ruled that, under current circumstances, cryptocurrency does not constitute valid wealth under Shariah law and is therefore an impermissible means of payment. Dirillis Ertugrul: Pak Education Institute Declares Turkish Series Is Against Shariah Days After PM Imran Khan Said It Will Unite Muslims of the Country.

While the religious edict holds no legal authority over the state, the seminary's rulings carry immense social and financial weight across the country. Financial experts warn the move could heavily spook investors and slow down retail adoption outside of major urban hubs, even though initial trading volumes have remained largely steady.

Government Pushes for "Crypto Diplomacy"

The religious pushback comes at a politically awkward time for Islamabad, which has heavily prioritized the virtualization of its economy. Pakistan consistently ranks as one of the largest retail crypto markets globally. To capitalize on this, the state-backed Pakistan Virtual Assets Regulatory Authority (PVARA) is currently finalizing frameworks to issue formal licenses to crypto exchanges in the coming months.

Furthermore, cryptocurrency has emerged as an unexpected tool for international relations. Pakistan recently entered into an agreement with an affiliate of World Liberty Financial—a crypto firm backed by the family of US President Donald Trump—to explore utilizing its USD-pegged stablecoin for cross-border transactions, a strategy Pakistani officials term "crypto diplomacy." Fatwa Against Imam Umer Ahmed Ilyasi: 'I Have Given Message of Love', Says AIIO Chief Imam on Fatwa Against Him for Attending Ram Temple 'Pran Pratishtha' Ceremony (Watch Video).

Regulators Seek a Nuanced Divide

In response to the decree, PVARA Chairman Bilal bin Saqib confirmed that the regulatory body is actively engaged in discussions with the seminary. The regulator is urging scholars to avoid blanket bans and instead evaluate digital assets based on their individual economic structures.

Regulators argue that a clear line must be drawn between highly volatile, speculative tokens and stable, asset-backed digital instruments. For instance, blockchain-recorded sukuk (Islamic bonds), gold-backed tokens, and fully reserved stablecoins represent tangible value or real-world ownership, which may align perfectly with Shariah compliance.

The Road Ahead for Shariah Digital Finance

The government maintains that cooperation with religious scholars is vital to the long-term success of the industry. Rather than halting its digital initiatives, PVARA plans to continue working alongside Islamic authorities to build what it hopes will become a globally recognized, Shariah-compliant digital finance framework. Whether investors will regain full confidence amid the conflicting state and religious guidance remains to be seen.

(The above story first appeared on LatestLY on Jul 16, 2026 04:29 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).