Fitch Ratings-Dubai/Jakarta/Toronto: Fitch Ratings expects cryptocurrency offerings in Islamic finance to continue developing gradually in some jurisdictions, supported by regulatory strategies, enabling regulations and, in some cases, national sharia rulings, Fitch Ratings says. However, adoption outside some markets is likely to remain uneven, reflecting divergent religious interpretations, lack of guidance from global Islamic finance standard-setting bodies and still-cautious bank participation. Broader digital-asset infrastructure and tokenisation initiatives may develop more readily than cryptocurrency trading in some markets.

Malaysia is among the more open jurisdictions for cryptocurrency adoption in Islamic finance. Its Shariah Advisory Council of the Securities Commission (SC) declared several cryptocurrencies sharia-compliant between 2020 and 1H26, including bitcoin, ethereum, ripple and stellar. Ten digital asset players were regulated by the SC at end-1H26, including exchanges, custodians and initial exchange offering operators. The total trading value on regulated digital asset exchanges increased by 23% yoy to over USD4 billion in 2025, but it is still just 2.5% of domestic equity market value traded. Bank participation remains largely restricted to services for registered operators.

The UAE is emerging as a global hub for virtual assets. Transaction volumes across entities regulated by Dubai’s Virtual Assets Regulatory Authority reached nearly USD680 billion in 2025, while assets under management exceeded USD2.5 billion. It had licensed over 55 virtual asset service providers as of September 2026. In 2025, the Higher Shari’ah Authority of the Central Bank of the UAE deemed dealing in bitcoin permissible. Since then, a small number of UAE conventional and Islamic banks have begun offering cryptocurrency brokerage and custody services, placing the country ahead of most core Islamic finance markets in direct bank participation.

Bahrain is also developing its crypto-asset ecosystem. As of September 2026, it had hosted nine crypto-asset service providers, several of them sharia-compliant. The Central Bank of Bahrain licensed the country’s first stablecoin issuer in June. Qatar’s digital-asset infrastructure has progressed more visibly than its cryptocurrency offerings, suggesting blockchain-based applications for sharia-compliant, asset-backed finance may gain traction sooner than bank-led cryptocurrency activity. By contrast, Saudi Arabia has not enacted legislation governing cryptocurrencies.

Sharia views on cryptocurrencies are mixed. Some prominent sharia scholars consider them non-compliant with sharia principles, while others deem them permissible subject to certain conditions. As the market evolves, new types of cryptocurrencies also continue to emerge, with differing views on their sharia compliance. The absence of formal guidance from AAOIFI and the IFSB also limits harmonisation across jurisdictions.

A number of Islamic banks across the six GCC countries, Turkiye, Pakistan, Jordan and Egypt are indirectly involved in the cryptocurrency ecosystem by acting as payment gateways on licensed exchanges. However, most rated Islamic banks have not developed material revenue streams from cryptocurrency trading, brokerage, custody or financing. Greater involvement could support fee income, but could also heighten reputational, liquidity, operational and compliance risks, including sharia-compliance risk.

In Pakistan, Darul Ifta at Jamia Darul Uloom Karachi recently issued a fatwa signed by Sheikh Muhammad Taqi Usmani, chairman of the AAOIFI Sharia Board, stating that cryptocurrencies do not constitute wealth under sharia. This could weigh on the development of cryptocurrency offerings in Pakistan and potentially other markets.

Contact:

Bashar Al Natoor
Managing Director – Global Head of Islamic Finance
bashar.alnatoor@fitchratings.com
Fitch Ratings – Dubai Branch
Maze Tower, 18th Floor
Sheikh Zayed Road, P.O. Box 215584, Dubai, U.A.E.

Saif Shawqi, CFA, FRM
Director – Islamic Finance
 saif.shawqi@fitchratings.com