Pakistan's Crypto Regulation Faces Shariah Compliance Test

Pakistan's crypto market is facing a significant challenge as a fatwa issued on June 10 declares digital asset payments, including stablecoins like USDT, impermissible under Islamic law. This ruling has put regulators in a difficult position as they navigate the collision course between digital finance ambition and Islamic legal authority.

The Virtual Assets Regulatory Authority (PVARA) Chairman Bilal Bin Saqib met with Mufti Muhammad Taqi Usmani, a widely respected Islamic scholar, around July 11 to explore a path toward Shariah-compliant digital asset frameworks. This meeting suggests that Pakistan's regulatory approach is not one of confrontation, but rather negotiation.

Pakistan ranks third globally in crypto adoption, with an estimated 40 million users engaged in digital assets as of mid-2026. The Virtual Assets Act 2026 established PVARA and mandated a Shariah Advisory Committee to address Islamic legal concerns related to digital assets. This provision suggests that legislators saw the collision between digital finance and Islamic law coming and built in a mechanism to manage it.