How is Pakistan navigating the challenges of crypto regulation under Islamic law? The country's Virtual Assets Regulatory Authority is facing a complex landscape where Shariah compliance significantly influences the future of digital assets. Bilal Bin Saqib, the chairman of the Virtual Assets Regulatory Authority, engaged in discussions with noted Islamic scholar Mufti Muhammad Taqi Usmani. This meeting took place after a fatwa issued on June 10 that deems the use of digital currencies for transactions as impermissible under Islamic principles.
The fatwa specifically affects transactions involving digital assets such as stablecoins, which do not meet Shariah definitions of valid wealth. This classification invalidates their role in purchases according to Islamic jurisprudence, creating a pivotal moment for the regulation of crypto in Pakistan, a nation with over 230 million residents.
Saqib acknowledges the significance of maintaining an open dialogue among regulatory authorities, religious scholars, and industry leaders to accurately assess blockchain advancements and digital assets rather than disregarding them outright. Pakistan ranks third in the 2025 Chainalysis Global Crypto Adoption Index, indicating a robust interest in digital assets with an estimated 40 million Pakistanis involved, corresponding to one out of every six citizens.
The recent legislative changes, including the passage of the Virtual Assets Act 2026, established the Permanent Virtual Assets Regulatory Authority, which now oversees licensing for virtual asset service providers. This act also included the formation of a Shariah Advisory Committee, highlighting lawmakers' foresight regarding potential conflicts between digital finance innovations and Islamic legal standards.
Moreover, in April, the State Bank of Pakistan allowed licensed virtual asset service providers to create bank accounts. This shift is crucial since it transitions the crypto industry from an unregulated environment into the formal economy. Recognized as a leading figure in Islamic finance, Usmani represents a dominant voice in shaping Shariah-compliant finance laws across diverse countries.
Investors active in Pakistan's market should closely monitor the developments from the Shariah Advisory Committee as their decisions are likely to have a more profound impact on market dynamics than standard regulatory updates. Saqib's approach emphasizes the importance of cooperation, suggesting that creating frameworks compliant with Shariah law can reconcile the interests of both regulators and scholars, paving the way for a balanced digital finance ecosystem.