POLICY: THE ISLAMIC DEBATE OVER CRYPTO

Pakistan made global headlines this June when Islamic scholar Mufti Taqi Usmani, along with five others, issued a fatwa [religious edict] arguing that it was “impermissible” to use cryptocurrencies to purchase goods. The argument was that crypto is “merely the recording of fictitious numbers in a digital account”, it is not recognised as maal [wealth] in Shariah.

Bilal bin Saqib, chairman of the Pakistan Virtual Assets Regulatory Authority (PVARA), followed up with a request for clarification: crypto actually encompasses a range of assets — from pure digital currencies to gold-backed tokens, stablecoins and complex financial instruments — some of which translate to legal claims on real-world wealth, precious metals and currencies. This is a valid concern. In several of these cases, cryptocurrency technology, the underlying blockchain, simply acts as a recording ledger, much like a database in a bank.

This ruling has significant implications in Pakistan for two reasons: one, after eight years of an outright ban on banking for all things crypto, Pakistan recently made a whiplash pivot to full-throated advocacy, jumping on board the crypto bandwagon. This fatwa will certainly complicate matters.