Pakistan Virtual Assets Regulatory Authority (PVARA) Chairman Bilal bin Saqib has asked Jamia Darul Uloom to draw a distinction between speculative cryptocurrencies and asset-backed digital tokens, its chief said on Wednesday.

The crypto czar told Reuters he had asked for the clarification after the seminary ruled last month that crypto-based purchases were not permissible under Islamic law.

The religious decree, or fatwa, has cast doubt on the government’s rapid embrace of cryptocurrency in Pakistan, which has long ranked among the world’s largest crypto markets by retail activity.

Mufti Taqi Usmani and six others had declared purchasing goods with cryptocurrency “impermissible” in a fatwa (religious decree) issued on June 10. It described cryptocurrency as “merely the recording of fictitious numbers in an account”.

Saqib said the regulator is in discussions with the seminary to assess digital assets by category, not as a single class.

“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 said.

A blockchain-recorded sukuk, or Islamic bond, represents ownership of a real, income-generating asset, he said, while gold-backed tokens or fully reserved stablecoins carry an enforceable claim on something tangible and redeemable.

Blockchain itself is “a record-keeping and verification technology, not a financial asset,” the PVARA chairman added.

Purely speculative tokens with no underlying asset are a separate matter, and “the scholars’ concerns there must be taken seriously,” he 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,” he said.

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

The edict, as it stands, could become “a hurdle to broader, bank-led crypto adoption beyond Pakistan’s urban trading community,” said Waqas Ghani, head of research at brokerage and investment banking firm JS Global Capital.

So far, however, crypto trading volumes have appeared unaffected, he said.

Last week, Saqib said he held a “constructive discussion” with Mufti Usmani on the Shariah status of digital assets.

The crypto czar said he shared with Mufti Usmani that “blockchain, digital assets, stablecoins, and tokenised real-world assets represent a broad spectrum of technologies and use cases”.