Pakistan’s Crypto Regulator Fights to Save Asset-Backed Tokens from a Total Ban

Internal debates over Sharia compliance

Pakistan’s virtual assets regulator has asked the country’s most influential Islamic seminary to clarify the difference between speculative assets and virtual assets. cryptocurrencies and asset-backed digital tokens, after a recent religious ruling sowed uncertainty over Islamabad’s rapid development. crypto plans.

Bilal bin Saqib, Chairman of the Pakistan Virtual Assets Regulatory Authority (PVARA), would have sought advice from Jamia Darul Uloom Karachi after the seminary ruled last month that cryptocurrency-based purchases were not permitted under Islamic law. The fatwa raised questions about government efforts to formalize a booming market in a country of more than 240 million people that ranks among the world’s largest retailers. cryptocurrency hubs.

The decision also highlighted disagreements within the seminary. According to BloombergSeveral clerics – including some involved in drafting the fatwa – differ on whether certain digital assets could be considered wealth under sharia, with some researchers arguing that asset-backed or fully reserved tokens stable coins may be eligible. Others argue that cryptocurrency remains too speculative to meet Islamic standards for lawful trade. The internal debate has increased pressure on regulators seeking religious consensus as they develop a national framework for digital assets.

Waqas Ghani, head of research at JS Global Capital, said in a Reuters report that the fatwa could hamper broader action led by banks. cryptocurrency adoption beyond Pakistan’s urban trading community, although he noted that trade volumes have not yet been affected.

The fatwa was issued by several scholars, including Mufti Muhammad Taqi Usmani, a leading authority in the field of Islamic finance. This followed an investigation into payment for books and an online course with cryptocurrency. Bloomberg reported that some clerics involved in the deliberations believe further study is needed before issuing a definitive position on the new instruments, such as tokenized sukuk (Islamic bonds) or gold-backed tokens.

The PVARA president said his organization works with academics to evaluate digital assets by category rather than treating them as a single class. The key question, he said, is whether a digital asset qualifies as sharia-recognized wealth.

Saqib said a sukuk registered on the blockchain represents ownership of a real income-generating asset, while gold-backed and fully reserved tokens stable coins carry enforceable claims on tangible, redeemable value. Blockchainhe added, is “a recordkeeping and verification technology, not a financial asset.”

Speculative tokens without an underlying asset are a separate issue, and Saqib said the academics’ concerns “need to be taken seriously.”

“We will continue to work closely with our academics as Pakistan develops its licensing framework and advances work on stable coins and tokenization of real-world assets,” he said. “Pakistan has the opportunity to become the global leader in Sharia-compliant digital finance, and this leadership must be built with our academics.”