Pakistan's Crypto Push Clouded by Islamic Law Clash

Pakistan's virtual assets regulator faces uncertainty over the country's crypto policies after a fatwa from its most prestigious Islamic seminary deemed crypto purchases invalid under Islamic law. The ruling, issued by Jamia Darul Uloom Karachi in June, has raised doubts over Islamabad's rapid crypto adoption. Bilal bin Saqib, chairman of the Pakistan Virtual Assets Regulatory Authority (PVARA), has requested clarification from the seminary, emphasizing the need to distinguish between speculative cryptocurrencies and asset-backed digital tokens. Saqib noted that blockchain is a record-keeping and verification technology, not a financial asset, while the seminary's ruling has sparked debates over whether crypto assets hold value under Shariah law. Pakistan has been aggressively pursuing crypto through tokenized state assets and exchange licenses, while also engaging in 'crypto diplomacy' with the U.S., including a partnership with World Liberty Financial, the crypto affiliate of former President Donald Trump. Waqas Ghani, head of research at JS Global Capital, noted no immediate impact on trading volumes, but the ruling could hinder broader bank-led crypto adoption. The seminary's ruling, issued by a group of scholars including Islamic finance authority Mufti Muhammad Taqi Usmani, was prompted by a query about paying for books and online courses with crypto.

The crypto market's sensitivity to such legal and religious ambiguities could shape Pakistan's long-term strategy, with success hinging on developing Shariah-compliant digital assets.