Pakistan's senior-most Islamic scholar Mufti Muhammad Taqi Usmani has issued a comprehensive fatwa declaring Bitcoin, Ethereum, crypto tokens, and USDT haram (forbidden under Islamic law). According to India Today, the ruling was issued by Darul Ifta at Jamia Darul Uloom Karachi on June 10, 2026, with the fatwa dated 24 Zilhaj 1447 AH. Usmani, who heads Wifaq-ul-Madaris Al-Arabia Pakistan and Darul Uloom Karachi, signed the ruling along with five other scholars. His son Hassan Usmani has confirmed the document circulating on social media is authentic. The ruling extends beyond Bitcoin and Ethereum to all blockchain-based tokens and stablecoins, with USDT named specifically. The scholars concluded that cryptocurrency does not qualify as 'maal' (the Shariah concept of wealth or property), describing it as 'merely a record of notional numbers in an account'. As per The Economic Times, Usmani's ruling carries significant weight as he chairs the Shariah Board of the Bahrain-based Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), whose standards are followed by more than 200 Islamic financial institutions globally. That verdict carries weight. Mufti Usmani advises Meezan Bank, Pakistan's second-largest lender by market value, and his word has moved markets before - in 2008, he judged that up to 85% of sukuk failed Shariah tests, causing global sukuk issuance to fall from $50 billion to about $15 billion in a year.
Pakistan Virtual Assets Regulatory Authority Chairman Bilal bin Saqib has called for continued discussion on digital assets under Islamic law following a meeting with scholar Mufti Taqi Usmani on July 11. According to reports from Dawn, Saqib said both sides shared one aim: protecting Pakistanis from fraud, exploitation, and financial harm. In his public statement, Saqib emphasized that blockchain, stablecoins, tokenized real-world assets, and other digital assets cover different technologies and uses that require 'careful technical assessment alongside rigorous Shariah examination' instead of one broad judgment. The regulator has now escalated this engagement by seeking Islamic guidance to distinguish speculative cryptocurrencies from asset-backed digital tokens to support wider adoption, as reported by Reuters. Saqib met Usmani last week and called the talk constructive, with the central question being whether a digital asset constitutes recognized wealth under Shariah. He pointed to sukuk recorded on a blockchain, gold-backed tokens, and fully reserved stablecoins as examples of assets that give holders claims on something real. The engagement is described as a reasonable step, though it amounts to the regulator seeking religious validation after the framework was already written rather than before.
The fatwa originated from a practical query about cryptocurrency transactions. As reported by Pakistan Today, a citizen had asked about the validity of buying two books using crypto, with one payment made in USDT. The scholars ruled the transactions invalid, stating that ownership of the goods was never established and advised the buyer to return the books. On a related question about online courses bought with crypto, the fatwa instructed the user to permanently delete the course files rather than benefit from them. The ruling is deliberately broad, clarifying that labels such as cryptocurrency, virtual currency, token, and stablecoin all describe the same category of digital assets, and that changing an asset's name does not change its religious status. The Jamia Darul Uloom Karachi seminary, whose rulings carry wide influence among Muslims well beyond Pakistan, ruled in June that, as of now, cryptocurrency is not wealth under Islamic law, and therefore not a valid means of payment.
The fatwa has triggered significant market reactions and investor concerns. According to The Economic Times, Kashif Raza, founder of crypto education platform Bitinning, noted that 'This is the first time that a scholar of Mufti Usmani's stature has issued a religious ruling calling crypto trading illegitimate...This has already triggered debate and consultation among governments in many regions'. Despite the ruling, Bitcoin was trading marginally lower at $64,555 on Thursday morning, while Ether was down around 1%. However, cryptocurrencies have shown resilience with Bitcoin gaining over 4% and Ether nearly 11% respectively in one week. The ruling's impact on religious investors appears immediate, with market participants closely monitoring whether religious investors are selling their crypto holdings following the fatwa. Waqas Ghani, head of research at JS Global Capital, said the fatwa could slow crypto adoption by banks, though trading volumes look steady so far.
The exchange comes as Pakistan moves ahead with a regulated virtual asset sector. According to Dawn, the Virtual Assets Act 2026 created PVARA as the body responsible for licensing and supervising virtual asset service providers. On April 15, the State Bank of Pakistan allowed banks to open accounts for firms licensed by PVARA, with the central bank requiring banks to verify licenses, perform due diligence, monitor accounts, and keep customer money separate from company funds. Banks cannot use their own capital or customer deposits to trade or hold virtual assets. However, the fatwa arrives at an inconvenient moment, highlighting policy incoherence as the state legalized an asset class that its religious establishment has now declared impermissible. Crypto trading volumes appear unaffected so far, according to JS Global Capital, though the edict could become 'a hurdle to broader, bank-led crypto adoption beyond Pakistan's urban trading community'. The timing is particularly awkward as Pakistan has used crypto to build ties with US President Donald Trump, whose $1 billion crypto earnings drew scrutiny.
The debate extends beyond Usmani's ruling, with Saylani Welfare International Trust, one of Pakistan's largest charities, taking an opposing stance. Its head mufti, Wasim Akhtar Al-Madani, issued a 37-page fatwa around 13 months ago treating crypto as a recognized right, not conventional wealth. This week, Saylani held an emergency meeting in Karachi to stand by that ruling, stating that 'The purchase and sale of crypto currency or digital assets may be considered permissible as a recognized right, provided that such transactions are not prohibited by the law of the country and do not expose an individual to unlawful humiliation, punishment or legal consequences'. Saylani has sent this fatwa to the Council of Islamic Ideology and the State Bank of Pakistan. The split mirrors a wider divide across the Muslim community, with Malaysia's Securities Commission's Shariah Advisory Council resolving in 2020 that digital assets count as maal and may trade on registered exchanges, while Indonesia's Ulema Council declared crypto haram as currency in 2021. Egypt's Grand Mufti ruled in 2017 that all crypto use was forbidden, likening it to gambling, and Turkey's religious authority voiced similar doubts, though the country still allows trading while banning crypto payments.
