Pakistan scholar declares crypto impermissible under Sharia, impacting investors

Mufti Muhammad Taqi Usmani, Pakistan's most prominent Islamic scholar and head of Darul Uloom, has issued a formal fatwa declaring cryptocurrency trading impermissible under Islamic law. The ruling, made public in June 2026, extends beyond a simple prohibition on speculation to assert that cryptocurrencies—including major assets like Bitcoin and Ethereum as well as stablecoins such as USDT—fundamentally do not meet the criteria for wealth under Shariah principles. The fatwa specifically prohibits not only trading but also the use of crypto tokens for purchasing goods and services, substantially restricting practical utility of digital assets within an Islamic framework.

The scholar's position represents a significant theological stance, as Usmani and six other Islamic scholars jointly declared that purchasing goods with cryptocurrency is "impermissible" under Islamic law. This distinction moves beyond questions of speculation or gambling—categories under which some Islamic authorities have permitted limited crypto activity—to a blanket prohibition based on the asset class's fundamental incompatibility with Shariah wealth requirements. The fatwa carries substantial authority given Usmani's standing as Pakistan's leading Islamic jurist and his influence across South Asian Muslim communities.

The ruling has prompted Pakistan's regulatory authorities to respond. The country's crypto chief has initiated discussions with Mufti Usmani and called for a broader review of digital assets policy in light of the religious objections. This engagement suggests potential regulatory recalibration ahead. Currently, Pakistan's cryptocurrency market operates in a legal grey area: while financial institutions are prohibited from processing crypto transactions, individuals retain the technical ability to own and trade digital assets without explicit legal restriction.

For investors and institutions with exposure to Pakistan's crypto market or Muslim-majority investor bases, the fatwa presents a material headwind. Religious rulings carry significant weight in financial decision-making across Pakistan and broader South Asian markets, particularly among institutional investors bound by Islamic finance principles and retail investors guided by religious counsel. The fatwa's comprehensive scope—covering trading, holding, and transactional use—limits potential workarounds that investors might otherwise exploit under narrower prohibitions.