Pakistan Crypto Regulator Seeks Shariah Clarity on Digital Tokens

Pakistan’s virtual assets regulator has asked Jamia Darul Uloom to separate speculative cryptocurrencies from asset-backed digital tokens as the country moves to build a formal framework for crypto and blockchain-based finance. The appeal was made by Pakistan Virtual Assets Regulatory Authority Chairman Bilal bin Saqib after a recent religious ruling raised questions over the permissibility of crypto-related transactions.

The issue became prominent after the seminary issued a fatwa last month declaring crypto-based purchases impermissible under Islamic law. That ruling created uncertainty around the government’s fast-moving digital finance agenda, especially because Pakistan has a large retail crypto user base and is trying to shift the sector from informal trading toward regulated adoption.

Saqib’s position is that digital assets should not be treated as one broad category. He argued that a purely speculative token without an underlying asset is different from a blockchain-based sukuk, a gold-backed token or a stablecoin backed by full reserves. In his view, the religious and legal assessment should depend on whether the instrument represents genuine ownership, value or an enforceable claim.

The PVARA chief said the question raised by the scholars — whether a digital asset can qualify as recognised wealth under Shariah — is central to Pakistan’s regulatory debate. He maintained that blockchain itself is a verification and record-keeping technology rather than a financial asset, meaning that scholars and regulators must examine each use case separately instead of issuing one blanket conclusion.

The matter carries weight because Pakistan is working on licensing rules, stablecoin policy and real-world asset tokenisation at a time when digital finance is becoming part of global regulatory competition. If the religious ruling remains broad, banks, fintech firms and formal investors may hesitate to enter the space, even as individual crypto trading continues outside conventional financial channels.

The debate also reflects a wider challenge faced by Muslim-majority economies trying to balance innovation with Islamic finance principles. Asset-backed structures are already familiar in Islamic finance through sukuk and other instruments, but decentralised tokens, volatile coins and speculative trading have created fresh legal and ethical questions for scholars and policymakers.

Market analysts believe the ruling could slow institutional adoption if it is not clarified. While retail trading volumes may not immediately fall, the bigger question is whether regulated banks and licensed platforms can confidently develop Shariah-compliant products. That uncertainty makes engagement between religious scholars, regulators and financial experts essential.

For Pakistan, the outcome could shape the country’s digital economy strategy. Clear guidance may help attract investment, protect consumers and create a compliant path for blockchain-based financial products, while confusion could push activity further into unregulated markets. The next step will depend on continued discussions between PVARA and religious scholars as Pakistan attempts to define its place in Shariah-compliant digital finance.