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
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 rulings. Instead, it was eye-opening. Our current debate, we believe, is merely the tip of the iceberg.
Here are three key insights from our experience.
‘Islamic economics’ is a work in progress
Modern Islamic economics is a relatively recent creation, emerging in the late 20th century through the pioneering works of Iranian cleric Baqir Sadr and Pakistani theologian Abu-‘Ala Mawdudi. The First International Conference on Islamic Economics was conducted only 50 years ago, in 1976.
The vision of this domain is to contribute to the lofty objectives of Islamic law [Maqasid-i-Shariah] — ie as per Imam Ghazali, “to promote the well-being of the people, which lies in safeguarding their faith, their lives, their intellect, their posterity and their wealth. Whatever ensures the safeguarding of these five serves public interest and is desirable, and whatever hurts them is against public interest and its removal is desirable.”
This vision results in clear prohibitions on usury and interest, gambling and other speculative activities, earnings from unethical and immodest practices, and prohibition on trading in forbidden goods. On the other hand, it expressly encourages participatory banking, profit and loss sharing, Islamic endowments, and Zakat.
But beyond these bare essentials, things are far more grey and there is still considerable work to be done. Islamic economics has also faced criticism for drifting from its foundational principles and merely replicating conventional Western economics with a religious flavour.
To address these challenges, Indian economist Dr Muhammad Nejatullah Siddiqui, a pioneer in the field, explicitly called for a broadening of horizons, for scholars to engage in constructive discussions with experts in different domains, and embrace divergent views. This leads directly to our second point.
Dialogue between scholars, economists and technologists is needed
A thematic study of 32 public fatwas issued between 2014 and 2024 found that 17 prohibited cryptocurrency outright, 10 permitted it conditionally, and five were cautious or neutral. The study also identified four key factors in the debate:
• Should cryptocurrencies be treated as maal [wealth and property] or thamaniyyah [money]?
• Gharar [excessive uncertainty] due to volatility and lack of transparency and regulation
• Speculation akin to maysir [gambling]
• Mafsadah [harm to society], including illicit and criminal use, environmental damage, and systemic wealth inequality
Egypt’s Dar al-Ifta al-Misriyya, a prominent Islamic advisory body, classified Bitcoin as haraam [forbidden] in 2017. Darul Uloom Deoband in India took a similar position in 2018. Saudi Arabia and Pakistan, meanwhile, withheld legal recognition from cryptocurrencies.
However, the study also notes that religious and legal positions on crypto have evolved due to growing understanding of the technology, more transparency and regulation. Outright bans may be hasty. In particular, digital assets — as opposed to decentralised cryptocurrencies — may be permissible when their structure and purpose satisfy Shariah requirements.
By 2023, bodies such as Indonesia’s Majelis Ulama Indonesia and Malaysia Shariah Advisory Council have moved towards varying levels of conditional acceptance. Indonesia’s Nahdlatul Ulama, described by some as the world’s largest Islamic organisation, with around 100 million members and affiliates, went a step further, classifying Bitcoin as maal and tsaman [medium of exchange].
The International Islamic Financial Services Board (IFSB), an international standardisation body, has incorporated digital assets into its Islamic-finance regulatory analysis, and called on stakeholders to assess Shariah issues associated with their different characteristics.
Research on the Mufti Taqi Usmani fatwa also appears to be ongoing. Dar ul Uloom Karachi is undertaking scholarly webinars and expert discussions to “further strengthen and refine” their research.
We expect opinions and rulings in the Islamic world will continue to evolve, particularly as Western governments draw ever closer to regulating and institutionalising crypto.
It is a deeply political question
Beyond the economics jargon and the glitter of the technology, crypto forces us to confront the very fundamentals of what money has become, the way modern governments and financial systems operate and, more than anything else, the overarching role of Empire. One cannot pass sentence on crypto without contemplating the obvious elephant in the room — just how ‘Islamic’ is our mainstream financial system?
The global financial crisis of 2008 opened our eyes to the extreme manipulations that have now become a routine part of the system, inflicting untold misery on the world. Islamic perspectives on government bonds, credit default swaps and stock buybacks would also be valuable.
And what about our regular currencies? It is an open secret that the US government simply prints money when it feels like it. This is like Aladdin’s magic lamp. The trillions that the US has spent over the last two and a half decades carving up the Middle East, toppling regimes right and left, and destroying entire societies — would that have been possible without the printing press? What about the debt, inflation and inequality that typically follow in the wake of such exercises? It would be great to see our scholars engage head-on with these questions.
Austrian economist and Nobel Prize-winner Friedrich Hayek wrote during the mass inflation of the 1970s, “Practically all governments of history have used their exclusive power to issue money in order to defraud and plunder the people.”
He followed up in 1984 with a line that reads like the script for modern crypto: “I don’t believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can’t take them violently out of the hands of government, all we can do is by some sly roundabout way introduce something that they can’t stop.”
Cryptocurrencies like Bitcoin do not permit unlimited coin generation or the kind of extreme financial wizardry that we witness in world markets today. For a Muslim, surely that should count as a big plus?
A serious debate about all things finance and crypto needs to happen. That debate is still awaited.
Taha Ali teaches at the NUST School of Electrical Engineering and Computer Science, Islamabad. X: @agrammaton
Hina Binte Haq is an assistant professor at the National University of Computer & Emerging Sciences, Islamabad
Published in Dawn, EOS, October 4th, 2026
