Key Takeaways
- Pakistan Virtual Assets Regulatory Authority (PVARA) Chairman Bilal bin Saqib has asked Jamia Darul Uloom to distinguish between speculative cryptocurrencies and asset-backed tokens.
- The religious decree issued by Mufti Taqi Usmani last month declared cryptocurrency purchases impermissible under Islamic law.
- PVARA is in discussions with the seminary to assess digital assets individually, considering their Shariah compliance.
Pakistan Virtual Assets Regulatory Authority (PVARA) Chairman Bilal bin Saqib has directed Jamia Darul Uloom to clarify the distinction between speculative cryptocurrencies and asset-backed tokens. This directive comes in response to a recent fatwa issued by Mufti Taqi Usmani, which declared cryptocurrency purchases impermissible under Islamic law.
Mufti Taqi Usmani and six others issued this fatwa on June 10, describing cryptocurrency as 'merely the recording of fictitious numbers in an account.' This ruling has raised concerns about the government's rapid embrace of cryptocurrencies in Pakistan, a country that ranks among the world’s largest crypto markets by retail activity.
In discussions with the seminary, Saqib emphasized the need to examine digital assets individually rather than as a single class. He stated, 'The central question the fatwa raises is whether a digital asset constitutes recognised wealth under Shariah. That is precisely the right question, and it is why these instruments must be examined individually.'
Saqib explained that blockchain-recorded sukuk (Islamic bonds) represent ownership of real, income-generating assets, while gold-backed tokens or fully reserved stablecoins carry an enforceable claim on something tangible and redeemable. He added, 'Blockchain itself is a record-keeping and verification technology, not a financial asset.'
Purely speculative tokens with no underlying asset are a separate matter, and Saqib noted that the scholars' concerns there must be taken seriously. He said, 'We will continue working closely with our scholars as Pakistan develops its licensing framework and advances work on stablecoins and real-world asset tokenisation.'
The edict could become a hurdle to broader crypto adoption beyond Pakistan’s urban trading community, according to Waqas Ghani, head of research at JS Global Capital. However, so far, crypto trading volumes have appeared unaffected.
Last week, Saqib held a 'constructive discussion' with Mufti Usmani on the Shariah status of digital assets. He shared that 'blockchain, digital assets, stablecoins, and tokenised real-world assets represent a broad spectrum of technologies and use cases.'
The PVARA's approach to this issue underscores its commitment to developing a Shariah-compliant digital finance framework in Pakistan. This development highlights the ongoing dialogue between regulatory bodies and religious scholars as they navigate the complex landscape of cryptocurrencies.
'The central question the fatwa raises is whether a digital asset constitutes recognised wealth under Shariah. That is precisely the right question, and it is why these instruments must be examined individually.'
Bilal bin Saqib, Pakistani crypto czar
'Blockchain itself is a record-keeping and verification technology, not a financial asset.'
Bilal bin Saqib, Pakistani crypto czar
