Cryptocurrency is 'Haram' says Fatwa by Pakistan's hardline cleric; will Donald Trump's earnings take a hit?

Karachi: Prominent Pakistani cleric Mufti Muhammad Taqi Usmani has issued a fatwa declaring cryptocurrency trading completely 'haram' (forbidden under Islamic law). This ruling, released by Darul Uloom Karachi, has not only cast doubt on the Pakistani government's efforts to establish a regulated crypto industry but has also raised concerns regarding a crypto venture linked to the family of former US President Donald Trump. The fatwa classifies all forms of digital currency—including Bitcoin and Ethereum—as falling outside the Islamic definition of "wealth" or "property." It explicitly states that buying, selling, trading, or investing in these assets violates Sharia principles, and that merely changing their name or terminology will not alter their religious status.

This fatwa is seen as a major crisis for the Pakistani government. For the past two years, the government has been aggressively attempting to legitimize and regulate the crypto sector, aiming to turn it into a new engine for economic growth. The fatwa presents a dual challenge for the government on both religious and economic fronts.

What are Pakistan Government's Regulatory Initiatives?

Pakistan first established the Pakistan Crypto Council and subsequently set up the Pakistan Virtual Assets Regulatory Authority (PVARA) to regulate Virtual Asset Service Providers (VASPs), license exchanges, and promote blockchain-based financial solutions. It is estimated that over 20 million Pakistanis are active in crypto-related activities, with transactions worth billions of dollars having taken place over the last few years.

Bilal Bin Saqib, Chairman of PVARA, has reached out to the scholars at Darul Uloom Karachi. He urged them not to categorize all virtual assets in the same way. Saqib acknowledged the validity of the core question raised in the fatwa—whether a digital asset qualifies as recognized property under Sharia—but emphasized the need to clearly distinguish between speculative cryptocurrencies and digital assets backed by tangible assets (such as gold, the US dollar, or other reserves). Citing examples, he noted that blockchain-based Islamic bonds, gold-backed tokens, and fully reserved stablecoins fall into a completely different category compared to tokens used purely for speculation.

What do the experts say?

In an interview with BBC Urdu, leading economist Yousuf Nazar questioned the fatwa, stating that the decision is based on a misunderstanding of cryptocurrency. Digital assets can be exchanged just like gold or major currencies; dismissing the entire sector means overlooking its potential benefits. Highlighting the issue of remittances, he noted that using crypto could significantly reduce the cost of sending money to Pakistan and speed up transfers. Meanwhile, financial expert Rashid Masood Alam remarked that the debate has shifted from "whether to allow it or not" to "how to regulate it." However, Zafar Paracha, General Secretary of the Pakistan Currency Exchange Association, warned that in a religious society like Pakistan, such a fatwa could have a deeply negative impact on the crypto business.

What is the Trump family's crypto connection to Pakistan?

An aspect that makes this entire matter even more intriguing is the Trump family's direct business link. On April 26, 2025, the Pakistan government signed a major agreement with the US company World Liberty Financial (WLF). WLF is a decentralized finance (DeFi) company backed by US President Donald Trump’s sons—Eric Trump and Donald Trump Jr.—and his son-in-law, Jared Kushner. The agreement was signed in Islamabad in the presence of Information Minister Attaullah Tarar and WLF Co-Chairman Zachary Witkoff (son of Trump’s special envoy, Steve Witkoff).