PVARA chief seeks distinction between speculative crypto and asset-backed tokens

ISLAMABAD: Pakistan Virtual Assets Regulatory Authority (PVARA) Chairman Bilal bin Saqib has asked Jamia Darul Uloom to differentiate between speculative cryptocurrencies and asset-backed digital tokens after a recent religious decree declared crypto-based purchases impermissible under Islamic law.

According to Reuters, the request followed a fatwa issued on June 10 by Mufti Taqi Usmani and six others, which said purchasing goods with cryptocurrency was not permissible. The ruling described cryptocurrency as merely the recording of fictitious numbers in an account, raising questions over the government’s recent push toward cryptocurrency regulation in Pakistan, a country that has long ranked among the world’s largest retail crypto markets.

Saqib said the regulator was engaging with the seminary to assess digital assets by category rather than treating them as a single class. He said the issue raised by the fatwa was whether a digital asset could be considered recognised wealth under Shariah, and argued that different instruments should be examined separately.

In his explanation, Saqib said a blockchain-recorded sukuk, or Islamic bond, represented ownership of a real, income-generating asset. He also said gold-backed tokens or fully reserved stablecoins carried an enforceable claim on something tangible and redeemable, while blockchain itself should be understood as a record-keeping and verification technology rather than a financial asset.

At the same time, he said purely speculative tokens without any underlying asset should be considered separately, adding that the concerns raised by religious scholars on that front must be taken seriously.

Speaking about the regulatory process, Saqib said PVARA would continue coordinating with religious scholars as Pakistan develops its licensing framework and moves forward on stablecoins and the tokenisation of real-world assets.

He was quoted as saying:

“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,”

He also 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,”

And added:

“Pakistan has the opportunity to lead the world in Shariah-compliant digital finance, and that leadership must be built with our scholars.”

Market and scholar engagement

Waqas Ghani, head of research at brokerage and investment banking firm JS Global Capital, said the fatwa in its current form could become a hurdle to wider bank-led crypto adoption beyond Pakistan’s urban trading community. However, he said trading volumes did not appear to have been affected so far.

Last week, Saqib said he had a constructive discussion with Mufti Usmani on the Shariah status of digital assets. He said he had shared with the scholar that blockchain, digital assets, stablecoins and tokenised real-world assets represented a broad spectrum of technologies and use cases.