In Pakistan, the phrase “crypto fatwa” does not refer to a single binding decree. It describes an overlapping and often conflicting field made up of: non-binding religious fatwas issued by influential darul iftas and scholars; binding regulatory actions by the State Bank of Pakistan, SECP, FMU and, now, PVARA; and court proceedings and enforcement actions that have pushed the state from informal suppression toward formal licensing. The result is a two-track reality: religious authority has mostly moved toward prohibition or strong caution, while the state has moved from ring-fencing and warning toward conditional regulation and licensing.

The most consequential recent Pakistani fatwa is the Darul Ifta, Jamia Darul Uloom Karachi ruling dated 24 Zilhaj 1447 AH / June 10, 2026, later widely reported on July 10, 2026. It held that payment in crypto for goods or courses is impermissible because crypto is not, in the view of the fatwa, valid maal in Sharia; on that logic, title to the purchased goods does not validly transfer, and users should unwind or stop benefiting from the transaction. That ruling is associated with Mufti Muhammad Taqi Usmani and other senior signatories, giving it exceptional influence in Pakistan and across global Islamic finance networks.

Yet Pakistan’s policy direction is moving the other way. After SBP’s April 6, 2018 circular declared virtual currencies not legal tender and barred regulated institutions from facilitating them, the regulatory stance gradually softened. SECP’s 2020 position paper explicitly favoured a “do-not-harm” style regulatory approach for digital assets; the Sindh High Court in 2020–21 pressed the government to clarify whether crypto was actually illegal; the FMU’s 2022 analysis stressed money-laundering and terror-financing risks but also called for a legal framework; and by 2025–26 the federal government had created the Pakistan Crypto Council, promulgated the Virtual Assets Ordinance 2025, enacted the Virtual Assets Act 2026, operationalised PVARA, and then had SBP replace its 2018 restrictions with a regime allowing banks to open accounts for licensed VASPs under strict AML, segregation and non-remunerative-account rules.

The core Islamic-law dispute is familiar across Muslim jurisdictions. The prohibitionist camp argues that most crypto assets fail tests of lawful property, stable valuation, public acceptance, and real transfer of possession; that speculative trading resembles maysir; that pricing opacity and volatility create excessive gharar; and that trading structures often embed riba-like or otherwise unlawful elements. The conditional-permissibility camp responds that fiat money itself is not asset-backed, that law and social acceptance can create valid monetary value, and that the real Sharia question is not “crypto in the abstract” but which token, on what platform, for what economic purpose, under what regulatory and contractual safeguards. Pakistan’s current religious establishment leans toward the first view; the state’s market architecture increasingly assumes the second.

Why the issue is legally and religiously complicated

Pakistan now has a clear distinction between religious permissibility and regulatory legality. A fatwa in Pakistan is not, by itself, state law. Conversely, a state licence does not settle Shariah permissibility for observant Muslims or Shariah-sensitive firms. This separation matters because Pakistan’s regulators are constructing a legal market for virtual assets at the very moment that the country’s most influential Shariah scholar has cast doubt on the validity of routine crypto transactions.

The constitutional Council of Islamic Ideology would, in theory, be a key institutional bridge between these two worlds because it advises the legislature on whether laws conform to the Qur’an and Sunnah. But the accessible public record is thin. In January 2018, public reporting said the CII had decided to study Bitcoin and have its research department examine the issue. In the materials publicly available on the CII website reviewed for this report, however, no final official CII crypto ruling was located. That absence is itself part of the problem: Pakistan’s most visible religious guidance has come from darul iftas and individual scholars rather than from a single nationally consolidating institution.

This ambiguity has practical consequences. A Muslim entrepreneur can now, in principle, seek regulatory clearance from PVARA, bank onboarding under SBP Circular Letter No. 10 of 2026, and AML registration pathways. But the same entrepreneur may still confront strong religious advice that many common crypto activities are invalid or forbidden. In other words, Pakistan has become a case study in legal permissibility without settled Shariah legitimacy.

Timeline of the Pakistani controversy

The timeline is drawn from SBP, SECP, the Sindh High Court, FMU, PID, the 2025 ordinance and 2026 act materials, and recent reporting on the June 2026 Darul Uloom Karachi fatwa and the government’s response.

A few turning points stand out. SBP’s 2018 circular did not criminalise household ownership as such, but it effectively cut crypto off from Pakistan’s regulated banking and payments rails by telling regulated entities not to process, use, trade, transfer, promote or facilitate virtual currencies and ICOs. This made Pakistan’s early posture a functional ban via financial intermediation, not a comprehensive criminal statute.

The Sindh High Court then exposed the fragility of that settlement. In December 2020, Dawn reported that SBP told the court it had never declared cryptocurrency illegal; in October 2021, the court observed that Pakistan might eventually regulate crypto rather than leave it underground, and it constituted a committee to consider feasibility and policy options. Those proceedings matter because they prefigured the state’s later move from informal exclusion to formal regulation.

By 2025–26, that transition became explicit. The Finance Ministry’s Pakistan Crypto Council meeting discussed a draft framework and an autonomous regulator; the Virtual Assets Ordinance 2025 and then Virtual Assets Act 2026 created the legal architecture for licensing, supervision and enforcement; PVARA began accepting NOC applications; and SBP replaced its 2018 instructions, allowing bank accounts for NOC-holders and licensed VASPs subject to verification, segregated PKR client money accounts, AML due diligence, suspicious transaction reporting, and a ban on banks investing in or holding virtual assets themselves.

Pakistani fatwas and state positions

The leading Pakistani religious rulings

The Darul Ifta, Jamia Darul Uloom Karachi ruling dated June 10, 2026 is narrow in form but broad in implication. It answered concrete questions about buying books or an educational course with cryptocurrency, but did so on a foundational proposition: crypto does not count as Sharia-recognised maal. If the consideration paid is not valid wealth, then the exchange does not validly transfer ownership. That is a stronger line than merely saying crypto trading is risky or disliked; it directly attacks the legal validity of the exchange itself.

Jamia Uloom-ul-Islamia Banuri Town had already been taking a prohibitionist line. Its April 1, 2021 Bitcoin fatwa calls Bitcoin a “fictitious currency,” says it lacks the essential attributes of real currency, denies the existence of a real traded subject-matter, says there is no true qabd or possession beyond numbers appearing in an account, and compares the business to a form of forex-style riba and gambling. Its November 25, 2021 fatwa repeats the position, adding that crypto has no material existence and no status as legal currency in Pakistan, so dealing and investing through it are impermissible. Banuri Town also extended that reasoning to mining, saying that if buying and selling are unlawful, mining is likewise unlawful.

The pattern among major Pakistani Deobandi institutions is therefore not one of subtle disagreement, but of overlapping prohibition rationales. The differences are in emphasis. Banuri Town stresses lack of materiality, fraud, no qabd, and resemblance to riba/qimar. Darul Uloom Karachi, especially in the 2026 fatwa, makes the more juristically loaded move of denying that crypto is maal at all, which then invalidates downstream transactions.

State regulators and policymakers

State institutions have spoken in a different register. SBP’s 2018 circular said virtual currencies were not legal tender and that SBP had not authorised or licensed any person or entity for issuing, selling, purchasing, exchanging or investing in them, while barring regulated entities from facilitating such activity. SECP’s 2020 directive formally reflected the anti-dealing posture in its regulated perimeter, but SECP’s November 2020 position paper simultaneously argued that Pakistan needed a policy response that balanced innovation and risk, and expressly said the paper was prepared mainly on the “second approach” — a do-not-harm approach — rather than outright banning as the preferred long-term strategy.

The FMU’s 2022 strategic analysis did not issue a Shariah judgment, but it is vital because it translated the debate into AML/CFT terms. It reported 1,841 suspicious transaction reports related to virtual assets for July 2021–June 2022, noted suspicious activity of about PKR 930.7 million, and described linkages to terrorism financing, hawala/hundi, fraud, smuggling and tax evasion. At the same time, the report said the purpose of the analysis was to help stakeholders develop a legal and regulatory framework because none yet existed. In other words, the state’s security agencies were moving toward regulated containment, not simply doctrinal rejection.

That trend culminated in PVARA and SBP Circular Letter No. 10 of 2026. Pakistan’s new framework is unmistakably licensing-based, AML-heavy, and consumer-protection oriented, not prohibitionist. Licensed VASPs must get a NOC, register locally, meet KYC and reporting requirements, and operate with segregated client accounts. PVARA also warned in April 2026 that even pilots and MoUs involving stablecoins or cross-border virtual-asset services need prior authorisation. This is a market-opening regime, but only for actors willing to enter a heavily supervised perimeter.

Comparison table

The jurisprudential dispute behind the rulings

The strongest Pakistani objections map onto four classical Sharia concepts. First is maal: can an intangible, decentralised token count as lawful wealth or property? Darul Uloom Karachi’s 2026 fatwa answers no, which collapses the transaction at the root. Second is qabd: if the buyer merely sees account entries without a legally cognisable subject-matter and effective possession, then sale formalities are defective. Third is gharar: opacity, manipulation risk, custody risk and extreme volatility can make the bargain excessively uncertain. Fourth is maysir/qimar: when trading is dominated by price-chasing rather than productive exchange, the activity begins to look like betting. Banuri Town also folds in an argument about riba by analogising crypto trading to problematic forex structures.

The case for permissibility does not deny those risks; it denies that they are inherent to all digital assets. Malaysia’s SAC is the clearest formal articulation of that view. It recognises regulated digital currency as mal, classifies some forms as `urudh rather than money, and says investment and trading can be permissible if the token’s proceeds, rights and benefits are Shariah-compliant and the market is run on a registered exchange. That is a profoundly different jurisprudential architecture: instead of asking whether “crypto” is intrinsically haram, it asks how legal design, underlying structure, and market regulation affect the ruling.

This wider split is visible in academic literature as well. A 2025 thematic analysis of public fatwas from multiple jurisdictions describes the field as divided between total prohibition and conditional acceptance, and shows that the same concepts — especially gharar — are interpreted more elastically in markets where regulators and Shariah advisory systems have built structured digital-asset screens. That helps explain why Pakistan’s clerical discourse currently looks closer to Egypt and Indonesia, while its regulators are increasingly building toward something more recognisably Malaysian in architecture, albeit without Malaysia’s settled Shariah consensus.

The most analytically important point is that fiat-vs-crypto arguments cut both ways. Pro-crypto Muslim scholars often argue that fiat currency is itself not asset-backed, derives value from law and convention, and therefore cannot disqualify crypto merely for lacking commodity backing. Pakistani prohibitionist fatwas partly evade that argument by saying the real issue is not backing alone, but public authority, legal recognition, stability, enforceability, and the existence of a real saleable subject-matter. That is why Pakistan’s mainstream fatwas do not mainly say “crypto is unlawful because it is digital”; they say it is unlawful because, in their view, it fails the legal and ethical tests that turn something digital into recognisable wealth or currency.

Enforcement, market reaction and practical implications

Pakistan’s enforcement history shows why regulation won out over simple suppression. In January 2022, the FIA issued a notice to a Binance representative while probing a scam involving 11 fraudulent apps that, according to FIA statements reported by major Pakistani outlets, defrauded Pakistani users of around $100 million. The case linked public fears about crypto not just to theology, but to scams, referral schemes, Telegram signal groups and weak recourse. Those incidents strengthened the hand of both prohibitionist scholars and regulators demanding licensing and AML controls.

At the same time, demand never disappeared. Pakistan ranked third in Chainalysis’s 2025 Global Adoption Index, and different official or quasi-official figures have put Pakistan’s user base anywhere from 15–20 million to 40 million, with volumes and holdings estimates varying dramatically. Those estimates should be treated cautiously because they come from different methodologies and, in some cases, from stakeholders advocating expansion. Still, the direction is clear: crypto use in Pakistan is already socially real, which helps explain the government’s turn to regulation.

Public reaction to the 2026 fatwa has therefore been mixed. The immediate official pushback did not challenge Mufti Taqi Usmani’s standing; instead, Bilal Bin Saqib argued that digital assets, stablecoins and tokenised real-world assets should not be judged through a “single lens,” and called for technical plus Shariah review. That response is telling. The state’s crypto advocates appear to understand that the politically and socially viable path in Pakistan is not to dismiss the fatwa, but to differentiate classes of digital assets and build a narrower claim: perhaps speculative meme-coin trading is problematic, but tokenised real-world assets, stablecoin rails, or regulated exchange activity may be treated differently.

For Pakistani Muslims, the practical implication is straightforward but uncomfortable: legal permission will not automatically resolve conscientious religious doubt. A devout Muslim who follows Darul Uloom Karachi or Banuri Town should, on those authorities’ reasoning, avoid not just speculative trading but even using crypto consideration to buy goods or benefit from certain digital services. For businesses, the implication is equally sharp: even if a VASP becomes licensed, it may still struggle to attract religiously conservative consumers unless it can build a Shariah governance case token-by-token, product-by-product.

Pakistan’s tax position remains less clear than its licensing position. In the 2026 Finance Bill PDFs reviewed for this report, searches for “virtual asset” and “crypto” did not return explicit matches; by contrast, FBR’s general filing system still requires a return of income and a wealth statement, and FBR has separately emphasised disclosure of market value of assets in returns. The absence of a clearly public, crypto-specific tax schedule in the reviewed official budget texts is not proof that crypto escapes taxation; it is evidence that public guidance remains under-developed, which is a policy gap for both taxpayers and administrators.

Gaps, disputed facts and policy recommendations

Several facts remain genuinely disputed. The first is institutional religious authority: Pakistan still lacks an easily accessible, official, final Council of Islamic Ideology ruling on crypto, leaving the field to highly influential but non-state fatwas. The second is market size: public estimates of Pakistani crypto users and trading volume vary sharply. The third is Saudi comparison: unlike Egypt, Malaysia or Indonesia, the Saudi position is harder to reduce to a single accessible central fatwa, and often appears in a mix of regulatory warnings, committee statements and individual scholar views rather than a single canonical ruling. These are not minor research inconveniences; they are part of the governance problem.

A sensible Pakistani policy response would begin by acknowledging that “crypto” is too broad a category for either blanket halalisation or blanket condemnation. PVARA, SBP, SECP and Pakistan’s major Shariah scholars should establish a formal joint working group that classifies digital assets into at least: decentralised payment tokens, stablecoins, security/asset-referenced tokens, utility tokens, and illicit/unregistered instruments. The aim should be to replace the current binary public discourse with a taxonomy-based Shariah and regulatory assessment. Malaysia’s experience shows that conditional permissibility becomes more credible when attached to regulated exchanges, defined asset classes, and explicit Shariah screens.

Second, Pakistan should develop an official Shariah standard or guidance note for virtual assets, ideally through a joint platform involving the State Bank’s Islamic banking apparatus, SECP’s Islamic finance function, and recognised external scholars. Without that, licensed VASPs will face a legitimacy deficit with observant users. Third, the state should prioritise products with the strongest social utility and the weakest maysir profile: tokenised sukuk-like structures, asset-referenced tokens, remittance rails, and regulated real-world-asset tokenisation. That would align better with the government’s stated goals of financial inclusion and formalisation than headline-grabbing promotion of speculative mining or generic retail token trading.

Finally, Pakistan needs sharper consumer protection and tax clarity. The lesson of the 2022 FIA scam investigations and the FMU’s suspicious-transaction data is that public appetite exists, but trust and recourse are weak. A coherent regime should therefore publish: an official list of licensed VASPs; mandatory risk disclosures in Urdu and English; complaint and restitution pathways; explicit prohibited-practice rules for referral schemes and signal groups; and plain-language FBR guidance on reporting gains, losses, holdings and wealth-statement treatment. Without these measures, Pakistan risks the worst of both worlds: a legally opening market, a religiously fragmented debate, and consumers still exposed to fraud.

On the evidence currently available, the clearest analytical conclusion is this: Pakistan has moved faster in building a regulatory state for crypto than in building a consensual Islamic jurisprudence for it. Until those two tracks are brought into closer conversation, the “crypto fatwa” debate will remain less a single verdict than a continuing contest over who gets to define lawful digital value in an Islamic republic.