Pakistan regulator seeks religious clarity on asset tokens

Pakistan’s virtual assets regulator has asked Jamia Darul Uloom Karachi to clarify how Islamic law should treat asset-backed digital tokens compared with speculative cryptocurrencies, and to recommend protections that would prevent a sweeping ban.

Bilal bin Saqib, chairman of the Pakistan Virtual Assets Regulatory Authority, formally requested guidance after a group of seminary scholars issued a fatwa last month declaring cryptocurrency-based purchases impermissible. The ruling prompted immediate consultations between regulators and religious scholars in a country of about 240 million people where retail crypto use is significant.

PVARA wants digital assets assessed by category rather than as a single class. The regulator and scholars are identifying token types that could be considered for regulation, including tokenized sukuk that record ownership of income-generating assets, and gold-backed tokens or fully reserved stablecoins that carry enforceable claims on tangible value. Saqib wrote that blockchain is “a record-keeping and verification technology, not a financial asset,” and that tokens tied to real assets deserve separate treatment from speculative coins.

The seminary ruling followed an inquiry about using cryptocurrency to pay for books and an online course. Members of the seminary differed in their views. Some clerics argued asset-backed tokens or fully reserved stablecoins might meet Shariah standards because they represent redeemable, tangible value. Other scholars maintained many cryptocurrencies are too speculative to qualify as recognized wealth under Islamic law.

Analysts and market participants have pointed to potential consequences for efforts to integrate digital assets into the banking system. Waqas Ghani, head of research at JS Global Capital, warned that a broad religious prohibition could slow bank-led adoption and the development of regulated products outside major urban trading centers, while noting that trading volumes in Pakistan have not yet shown a clear impact.

PVARA’s discussions with the seminary aim to build a religiously grounded basis for regulation so officials can proceed with licensing frameworks for stablecoins and real-world asset tokenization. The regulator plans to continue working with scholars as it develops rules for banks, payment systems and custody of digital tokens. Saqib added, “We will continue working closely with our scholars as Pakistan develops its licensing framework and advances work on stablecoins and real-world asset tokenization.”

The seminary’s clarification is expected to influence whether regulators approve limited asset-backed digital instruments or move toward a broader ban on cryptocurrency transactions.