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.

Second, and more importantly, Saqib claimed recently in a Senate committee briefing that Pakistan is already the world’s third largest crypto market, with some 40 million crypto accounts. This number dwarfs our active taxpayer count, which stands at merely six million.

The debate over cryptocurrency in the Muslim world is still evolving, raising questions not only about digital assets but about the nature of money and the financial systems built around it

The debate over cryptocurrency in the Muslim world is still evolving, raising questions not only about digital assets but about the nature of money and the financial systems built around it

Given this context, it is certainly good to have the grand crypto debate now rather than later.

As two computer science academics with a research focus on crypto, we authored a paper summarising Islamic perspectives on this topic in 2018. Lacking background in economics and theology, we expected a straightforward exercise in documenting legal........

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