Mufti Taqi Usmani Declares Crypto Trading Impermissible
By Sayed Abdullah | July 10, 2026
The fatwa was brief, its implications vast. A panel of scholars from Darul Uloom Karachi, led by the most influential Islamic jurist in Pakistan, Mufti Muhammad Taqi Usmani, has declared that buying and selling cryptocurrency, crypto tokens, and stablecoins is impermissible under Islamic law. The ruling, confirmed by Usmani's son Hasan Usmani, states that digital assets like Bitcoin, Ethereum, and Tether do not qualify as maal — property or wealth — or as an asset capable of lawful ownership under Shariah. For the millions of young Pakistanis who have turned to crypto to protect their savings, send remittances, or simply trade, the message is stark: what you are doing is not just risky. It is haram.
And that judgment, coming from a scholar whose legal opinions have shaped Islamic finance for decades, will echo far beyond the walls of the seminary.
What Actually Happened
The fatwa, issued by Usmani and other affiliated scholars, does not distinguish between different types of digital assets. It applies equally to cryptocurrencies, crypto tokens, and stablecoins. The ruling explains that although these assets are referred to by different names — virtual currencies, tokens, or stablecoins — they all belong to the same underlying class of digital instruments. And under Islamic jurisprudence, they cannot be considered real wealth or property. Consequently, trading or dealing in them is impermissible, regardless of the terminology used in the marketplace. The scholars also noted that altering the name or classification of a digital asset does not change its status under Islamic law; the same principles apply uniformly.
Mufti Taqi Usmani is not just any scholar. He chairs the Shariah board of the Accounting and Auditing Organisation for Islamic Financial Institutions, the global standard-setter for Islamic finance. He has been the architect of countless rulings that govern how Islamic banks operate, from Murabaha to Sukuk. When he speaks on financial matters, the global Islamic banking industry — worth over $3 trillion — listens. His endorsement of a financial product can open markets; his prohibition can close them. The fatwa on crypto, therefore, is not merely a religious opinion. It is a signal that could reshape the behaviour of Islamic investors, financial institutions, and even regulators in Muslim-majority countries.
The Bigger Picture
Pakistan has one of the highest rates of cryptocurrency adoption in the world, driven largely by a young, tech-savvy population desperate for alternatives to a volatile rupee and limited investment options. Remittances, a critical lifeline for the economy, increasingly flow through crypto channels to avoid high fees and exchange rate losses. A significant portion of the freelance workforce holds earnings in USDT, a stablecoin pegged to the dollar, as a hedge against inflation. The fatwa lands in the middle of this reality, creating a profound dilemma for millions. Do you obey the religious ruling and sell your holdings, potentially taking a financial hit? Or do you continue, hoping the fatwa will be reinterpreted, or that economic necessity will justify your actions?
The ruling also complicates the government's already ambiguous stance on digital assets. The State Bank of Pakistan has historically warned against cryptocurrencies but has not formally banned them. The Securities and Exchange Commission of Pakistan has been exploring a regulatory framework. This fatwa adds a powerful religious dimension to the policy debate. If the government wants to regulate or tax crypto, it must now contend with a ruling that questions the very legitimacy of these assets. Banks, already cautious about crypto, will be even more reluctant to engage with a sector that a scholar of Usmani's stature has declared impermissible.
Globally, Islamic rulings on crypto are not uniform. Some scholars in Malaysia and the UAE have allowed certain types of digital assets under specific conditions, arguing that blockchain technology itself is neutral and that cryptocurrencies can function as a medium of exchange if properly regulated. But Mufti Usmani's authority in the Hanafi-Deobandi tradition, which dominates Pakistan and large parts of South Asia, makes this fatwa particularly weighty. It will likely be adopted by affiliated seminaries and could influence legal rulings in the country's Shariah courts. The global Islamic finance industry, which has been tentatively exploring blockchain applications, will also take note. A blanket prohibition from the most respected figure in the field is a headwind that no Islamic bank can easily ignore.
What This Means for Pakistanis
For the ordinary Pakistani who dabbles in crypto, yaar, this fatwa lands like a bucket of cold water. Take the example of a freelance graphic designer in Johar who holds $800 in USDT to hedge against the rupee's inevitable slide. That amount, roughly Rs. 225,000, is not an investment. It is a survival tool. The fatwa tells him that holding it is impermissible. He now faces a choice: sell at a loss, convert to a Shariah-compliant asset that may not exist in the crypto space, or live with the guilt of disobeying a ruling from a scholar he respects. The pressure is not merely financial. It is spiritual, and that makes it heavier than any market crash.
The broader economic impact could be substantial. If a significant number of Pakistani crypto users decide to exit the market in response to the fatwa, the outflows could weaken the peer-to-peer crypto networks that have become an unofficial part of the remittance infrastructure. Families that rely on relatives abroad sending money through crypto channels may find those routes disrupted. In a country where annual remittances through official channels exceed $30 billion, the crypto component is still small but growing rapidly. A religious ruling that slows that growth has real consequences for financial inclusion, especially for those who lack access to traditional banking.
On the other hand, some investors may rationalise that the fatwa is advisory, not legally binding, and that economic necessity justifies their actions. Others may wait for a counter-ruling from a different scholar. The fragmentation of religious authority in Pakistan means that no single fatwa commands universal obedience. But Mufti Taqi Usmani's influence is enormous, particularly among the middle class and the religiously observant, who are precisely the demographic that crypto platforms have been trying to attract. The fatwa will slow that growth. It may not kill crypto in Pakistan. But it will make it harder to love.
My Take
I'll be honest — I am not a scholar of Islamic jurisprudence, and I will not pretend to offer a theological opinion. But I can see the deep tension this fatwa creates. On one hand, Mufti Taqi Usmani's reasoning is rooted in a coherent framework: for something to be traded, it must have intrinsic value, clear ownership, and legal recognition as property. Cryptocurrencies, in their current form, struggle to meet all these criteria. On the other hand, the economic function they serve for millions of Pakistanis is real. They are a hedge, a payment system, a store of value. To declare them all impermissible without offering a viable alternative — a Shariah-compliant digital asset that ordinary people can actually access — is to leave a vacuum that the market will fill, perhaps with products that are even less regulated.
The government now has a responsibility. It cannot remain silent while the country's most respected religious authority declares an entire asset class impermissible, even as millions of citizens continue to use it. It must decide whether to regulate crypto, ban it, or create a Shariah-compliant framework that addresses the scholars' concerns. The fatwa has forced the issue. Ignoring it is not an option. The Islamic finance industry, too, must respond. If crypto is impermissible because it lacks the attributes of maal, can those attributes be created? Can a stablecoin be designed that meets the rigorous standards of Islamic commercial law? These are questions that require scholarship, innovation, and political will. The fatwa is not the end of the conversation. It is the beginning of a much harder one.
What do you make of the fatwa — will it change how you use crypto, or does economic necessity override religious ruling? Share your perspective.
Sayed Abdullah is the founder and editor of Prime Pakistan. Based in Karachi, he writes about economics, technology, and the stories that shape Pakistani lives. Read more.
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Sources
- Darul Uloom Karachi — Official fatwa issued by Mufti Muhammad Taqi Usmani and associated scholars.
- Hasan Usmani — Confirmation of the ruling on behalf of his father.
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