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As efforts are underway to legalize digital currencies and other digital assets in Pakistan, a new debate has begun about the status of Sharia law in the sector.
The fatwa issued by Darul Uloom Karachi, which includes renowned religious scholar Mufti Taqi Usmani and other scholars, said that purchases using digital money are prohibited on the basis that digital money does not meet the definition of wealth or property in Sharia law.
The fatwa comes at a time when the Pakistani government has established the Pakistan Non-White Assets Regulatory Authority to formulate laws and regulations regarding digital assets and their regulation.
Following Taqi Usmani’s speech, PVARA Chairman Bilal bin Saqib met with Taqi Usmani, who he said discussed the status of Shariah in digital assets.
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So, the question is, what impact could this fatwa have on the use, trade and investment of digital currency in Pakistan? The BBC spoke to financial sector experts about this.
What was the Mufti’s rationale for banning crypto transactions?
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Mufti Taqi Usmani’s statement banning purchases through digital currency was followed by a fatwa of the Karachi Darul Uloom signed by him and five other scholars.
The question posted to Darul Uloom Karachi asked whether it is allowed to buy books online using digital or digital currency.
The fatwa, signed by Mufti Taqi Usmani and five other scholars, said purchasing digital currency is prohibited, citing studies that showed digital currency does not meet the definition of wealth.
The fatwa says that this is not wealth according to Sharia principles, but a non-existent number in accounts.
Speaking about the fatwa, former economist and former head of emerging markets investment at Citibank Yusuf Nazar believes that “Mufti Taqi Usmani’s opinion not to include cryptocurrency in the definition of wealth is based on a misunderstanding.”
He stated that the cryptocurrency can be easily exchanged for any major currency in the world, including dollars, euros, etc.
Yusuf Nazar says that just as gold is an asset that can be traded and exchanged for any currency, cryptocurrencies can also be exchanged for large sums of money.
He says the main reason not to consider cryptocurrency as an asset is ignorance and lack of accurate information.
Cashless cashier of Pakistan meets Mufti
Quote Image, Bilal bin Saqib on social networks
After Mufti Taqi Usmani declared the purchase of cryptocurrency prohibited, Bilal bin Saqib, Chairman of the Virtual Assets Regulatory Authority of Pakistan, met with Mufti Taqi Usmani and discussed the status of Shariah in digital assets.
Bilal bin Saqib said in a post published on his social network X that he had a practical meeting on digital assets and Shariah status with Mufti Taqi Usmani, where various aspects were discussed.
He said that we have agreed to protect the citizens of Pakistan from financial fraud, exploitation and potential financial loss.
Bilal Bin Saqib said the discussion also highlighted that blockchain, digital assets, staking coins and real asset tokenization are areas of technology and their uses. Therefore, instead of looking at it from one side, it should be carefully and comprehensively worked out from both the technical and Shariah sides.
According to the statement, since this sector is witnessing rapid development, it is hoped that dialogue between scholars, legislators and experts in this sector will continue in the future so that Pakistan’s policies can be designed keeping both in mind.