State Bank of Pakistan Museum in Karachi for a story about Pakistan's crypto rules and a religious ruling on USDT payments.

Pakistan’s Crypto Push Just Ran Into a Religious Ruling Against USDT

By Isaac • July 12, 2026 1:55 pm • Comments

Pakistan spent the past year building a legal lane for crypto. A new religious ruling now questions whether some of the assets inside that lane qualify as wealth at all.

Mufti Taqi Usmani and five other scholars signed a fatwa saying purchases made with cryptocurrency were impermissible under their interpretation of Islamic law. The ruling reached stablecoins such as Tether’s USDT, the third-largest crypto asset by market value.

Pakistan’s virtual-assets regulator is answering with dialogue instead of retreat.

Trending: Twenty-Seven Crypto Firms Are Building a Court for AI Agents

The collision creates two separate tests for the country’s crypto policy. A platform can satisfy the government and still face a serious religious objection from the people it hopes to serve.

Dawn reports that the fatwa was dated June 10 and became public on July 10. It answered a question about buying books with cryptocurrency and concluded that the purchase was impermissible.

The scholars reasoned that cryptocurrency did not meet their definition of maal, or recognized wealth, under Shariah. Their analysis focused on the tokens’ digital form, uncertain origin, and the absence of the property characteristics they considered necessary.

Usmani, a former judge of Pakistan’s Federal Shariat Court, was joined by five other scholars from Jamia Darul Uloom Karachi. That gives the opinion religious weight, even though it does not carry the force of an act of Parliament.

The distinction is concrete: the fatwa does not repeal Pakistan’s Virtual Assets Act, revoke a PVARA license, or order the State Bank to close regulated accounts.

Bilal bin Saqib, chairman of the Pakistan Virtual Assets Regulatory Authority, met Usmani after the ruling surfaced. He framed the conversation around a shared goal of protecting Pakistanis from fraud, exploitation, and financial harm.

Cointelegraph reports that Saqib asked for digital assets to be examined by category, with technical analysis conducted alongside rigorous Shariah review. His list included blockchain networks, stablecoins, tokenized real-world assets, and the wider range of products commonly grouped under crypto.

That approach pushes back on a single classification without directly challenging the scholars’ authority. A speculative token, a dollar-backed payment asset, and a token representing a claim on real property can have very different economics.

Saqib’s response leaves room for religious scholars to draw distinctions after examining how each product is issued, backed, redeemed, and used. It also keeps the regulator’s licensing work moving while that examination continues.

Pakistan’s formal rulebook is already much farther along than the debate might suggest.

The PVARA regulatory framework identifies the Virtual Assets Act, 2026 as the country’s first comprehensive law for virtual assets and service providers. The law created PVARA as the federal body responsible for licensing, supervision, consumer safeguards, and enforcement.

Its licensing structure covers exchanges, custody, transfers, token issuance, derivatives, mining, and other defined services. Firms are expected to keep transaction records, report suspicious activity, screen sanctions, protect customer data, and meet anti-money-laundering standards.

PVARA also finished a public consultation on detailed service regulations in early July. Those draft rules address client-asset segregation, prudential controls, technology risk, conduct, and ten activity-specific license categories.

In other words, Pakistan is deciding how regulated crypto businesses operate. The fatwa asks a prior question about whether a Muslim customer should use the asset for a purchase in the first place.

The banking system shows how far the policy reversal has gone.

The State Bank of Pakistan’s current VASP circular replaced its 2018 prohibition on banks facilitating virtual-currency activity. Regulated financial institutions may now open accounts for firms holding a valid PVARA license.

Banks can also open limited-purpose accounts for firms holding a PVARA no-objection certificate while they complete the full licensing process. Virtual-asset transactions require the license before broader services begin.

Client-money accounts must remain denominated in Pakistani rupees, separate from a VASP’s own funds, and unavailable for cash deposits or withdrawals. Banks must verify licenses, perform enhanced due diligence, monitor transactions, and report suspicious activity.

The circular still bars banks from investing, trading, or holding virtual assets with their own money or customer deposits. Pakistan opened a controlled banking connection, not a free-for-all.

USDT makes the religious dispute commercially significant.

CoinGecko’s Tether data placed USDT’s market value near $184.2 billion, behind only Bitcoin and Ether. Roughly $30.3 billion moved through the asset over the prior 24 hours, more trading volume than Bitcoin recorded during the same snapshot.

USDT is used as exchange collateral, a dollar substitute, a remittance rail, and a settlement asset across markets where bank access can be slow or expensive. A ruling that expressly reaches stablecoin purchases touches everyday crypto plumbing rather than a small speculative corner.

Its dollar peg also sharpens Saqib’s category argument. A redeemable stablecoin presents a different ownership and price-risk structure from an unbacked token, though the scholars may still reject it under their analysis of digital property.

Regulators cannot settle that religious question by writing tougher custody rules.

The PVARA advisory on virtual-asset projects already claims authority over issuance, transfer, custody, exchange, stablecoin pilots, and tokenization programs offered in Pakistan. It warns that public pilots require prior authorization and may use the sandbox, no-action letter, or no-objection process.

Issued on April 26, the advisory followed public announcements involving financial institutions, stablecoin remittances, and cross-border payment projects. PVARA warned that announcing a pilot before engaging the regulator can create legal, reputational, and FATF-compliance risk, including the possibility that the project cannot proceed.

The document gives developers three controlled routes: the regulatory sandbox, no-action relief, and the no-objection certificate process. Pakistan’s stance is open to experimentation, but every public-facing service remains conditional on authorization and supervision.

That framework can decide which company is permitted to offer USDT-related services and under what safeguards. It cannot decide whether a religious customer accepts USDT as valid wealth.

The next step will require product-level detail.

Scholars will need clear information about reserves, redemption rights, issuer obligations, custody, settlement finality, and the legal claim a holder receives. Regulators will need to show that licensing addresses fraud without pretending every licensed asset carries religious approval.

Crypto companies entering Pakistan may eventually need both a compliance opinion and a Shariah opinion. Treating one as a substitute for the other would leave the hardest part unresolved.

Pakistan has built the legal doorway. The argument now is whether millions of people will view the assets passing through it as money, property, speculation, or something that demands a new category altogether.

Join the conversation!

We have no tolerance for comments containing violence, racism, profanity, vulgarity, doxing, or discourteous behavior. If a comment is spam, instead of replying to it please click the icon below and to the right of that comment. Thank you for partnering with us to maintain fruitful conversation.

 

Search ProCoinNews