Pakistan's Virtual Asset Market at a Crossroads: Conflict Between Deregulation and Religious 'Haram' Ruling

On July 11, 2026, Pakistan's virtual asset market faced a significant cultural and religious hurdle. Just months after the State Bank of Pakistan (SBP) lifted an eight-year ban, the country's most influential Islamic scholar issued a ruling declaring virtual assets taboo.

This ruling is sparking intense debate between the country's modernization goals and the Shariah-compliant framework that defines its financial identity. Approximately 27 million users are now at a crossroads between national law and religious beliefs, which is analyzed to have a significant impact on the overall Pakistani economy.

Islamic scholar Mufti Taqi Usmani issued a fatwa declaring virtual asset trading as 'haram,' which is not permitted under Islamic law. He pointed out that virtual assets have no intrinsic value and are highly speculative, emphasizing that the purchase and trading of such assets violate Islamic financial principles.

Virtual assets cannot be tracked or controlled and cannot be considered wealth, thus contradicting Islamic principles of taxation and transparency. They are merely a means of speculation.

This situation directly conflicts with the forward-looking policy change made by the State Bank of Pakistan (SBP) on April 15, 2026. At that time, the SBP lifted the eight-year ban by allowing banks to provide financial services to licensed virtual asset service providers. However, direct investment of a bank's own funds or customer deposits into virtual assets remains prohibited.

Government Response: Dual Review of Technology and Religion

Bilal Bin Saqib, Pakistan's Minister of State for IT and Telecommunication, called for a broader review of the situation on Saturday, July 11, 2026. He proposed a 'dual-track' strategy to evaluate blockchain technology and digital assets from both technical and Sharia perspectives, seeking a middle-ground solution between religious concerns and technological innovation.

• Whether the new draft of the Virtual Asset Clarity Act will be disclosed and its contents
• Additional guidelines for providing virtual asset services from the State Bank of Pakistan (SBP)
• Final evaluation results of the joint technical and Sharia review committee proposed by the government

Pakistan is the world's third-largest virtual asset market, with approximately 27 million users. This large-scale adoption suggests how critical this debate is for the national economy and financial inclusion. Concerns are also being raised that if regulatory uncertainty is not resolved, large amounts of capital that cannot find a legal path may leak into the underground market.

The recent case where Interpol dismantled a $122 million fraud ring and arrested more than 5,800 people has once again highlighted the risks of digital assets. These global security threats and money laundering concerns are being used as grounds to support religious concerns that virtual assets are difficult to track and tax, putting pressure on regulators to demand stricter monitoring systems.

Islamic finance experts point to the difficulty of applying Zakat, the traditional Islamic taxation system, to virtual assets as a major issue. The dominant logic is that because virtual assets have no physical substance and cannot be centrally controlled, it is difficult for them to be recognized as a means of accumulating 'wealth' as defined by Islamic law.

The global regulatory environment is also changing rapidly, with a new draft of the Clarity Act expected to be announced in major countries like the United States this week. While keeping an eye on these international trends, the Pakistani government faces the complex task of establishing its own legal framework that reflects strong domestic religious sentiments.

Ultimately, the future of Pakistan's virtual asset market depends on how it balances technological innovation with religious tradition. The results of the government's dual review and the regulatory guidelines to be announced in the future are expected to be key variables determining the direction of 27 million users and the success or failure of Pakistan's digital economy.