cryptocurrency in pakistan

Written by Javeria Abbas 9:41 pm Current Affairs, Pakistan, Published Content, Research Papers

Is there a Future for Cryptocurrency in Pakistan?

Javeria Abbas analyzes the factors that are responsible for the adoption and the rejection of cryptocurrency in Pakistan. She tries to relate each factor responsible for the rejection of cryptocurrency in Pakistan with the Islamic finance system. This paper also gives an insight into the bitcoin transaction system, how bitcoin is used, and how its usage is classified as unislamic.
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Ms Javeria Abbas is pursuing a Bachelor's in development studies from Bahria University. She is currently a UN Volunteer working on a project in Africa and a recent intern at the Institute of Rural Management.


The existing digital era has brought some changes in the global economic situation as well as the traditional financial system. Cryptocurrency is a form of digital currency and just like other traditional currencies, it is also used as an exchange medium through a technology known as “blockchain technology”. It is also known as payment tokens, crypto tokens, electronic currency, cyber currency, virtual commodity, and virtual assets (Almajali et al., 2022).

The transfer of money through cryptocurrency is without the involvement of financial intermediaries like banks and it is also free from government control. The customers of cryptocurrency are provided with options that are beyond the debit card, credit card, or flat currencies. Bitcoin is the first cryptocurrency that was formed in this regard by Satoshi Nakamoto.

El Salvador was the first country to recognize Bitcoin as a formal legal tender. Bitcoin is traded on regulated exchanges even if the prices are unregulated. After the introduction of Bitcoin, various other various other cryptocurrencies were introduced. These developments increased the reliability of cryptocurrency and provided a new alternative for trading and investment.

PWC declared that in 2020 the cryptocurrency hedge funds value had doubled as compared to the previous year (Almajali et al., 2022). However, in Pakistan, the use of cryptocurrency has always been termed illegal.

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Shariah compliance in cryptocurrency transactions requires applying Islamic laws (Saleh et al., 2020). The transaction raises a lot of doubts as in some cases, it is described as a system with no value, and like other currencies, it is not a commodity or asset such as fiat money. Other reasons that hinder the adoption of cryptocurrency in Pakistan are the uncertainty issues which include volatility, ambiguity, and obscurity.

Cryptocurrency vs Traditional Money

In 2015, Pakistan launched its first cryptocurrency known as Pakcoin. Cryptocurrency is an emerging and controversial technology in Pakistan, but in 2018, cryptocurrencies were banned by the Federal Board of Revenue and the State Bank of Pakistan.  There are many differences between cryptocurrency and traditional money. The prices of exchange rates in the traditional finance system fluctuate according to economic conditions whereas the value of the bitcoin is based upon supply and demand.

There are a lot of factors due to which many people in Pakistan prefer cryptocurrency. Cryptocurrencies are decentralized which means that they are not backed up by any regulatory body or government. Due to this reason, it provides anonymity, low cost, and quick and transparent transactions as a result of blockchain technology (Hasan et al., 2022).

The main reason that makes cryptocurrency controversial is that its principles contradict those of Islam. One of the first concerns regarding Bitcoin from an Islamic perspective is that it involves the element of uncertainty (gharar) as the inventor of Bitcoin is unknown because the pseudonym Satoshi Nakamoto left the project in 2010 and even revealed very little about himself.

The second reason is that due to no central authorities or intermediaries, there are possibilities of fraud as no central authority is there to validate the monitoring transaction system. Due to high volatility, the value of Bitcoin is highly unstable due to which its operation is classified as uncertainty (gharar) in the Islamic finance system.

Since cryptocurrency is not supported by government regulations or laws, the value is not tied to a valuable asset, bringing an uncertain status to the validity of Bitcoin in the current economic system.

Also Read:  The Federal Board of Revenue of Pakistan


The reason why cryptocurrency is banned in Pakistan is because it is stated by the officials that it is not in accordance with Islamic principles and instead is just like gambling where one puts all his wealth just to get it doubled without knowing whether it would be doubled or not.

A mix of opinions is there regarding the ban on cryptocurrency in Pakistan as few people are in favor of it and few people are not. According to one of the respondents, “The banning of bitcoin is not a logical thing to do. It does not contradict the Islamic Principles of finance in the Quran Allah Almighty has said that everything is allowed until and unless it does not contradict the Shariah Principles”.

He further added reasons to support his claim he said, “In the Quran, it is stated that anything can be used as money if it is treated as a valuable thing among the people if it is accepted as a medium of exchange, if it is a measure of value, and if it serves as a unit of account. Bitcoin fulfills all these criteria so it should be considered as money and should be legal to use”.

Another person we interviewed was in favor of banning cryptocurrency. He said that, “Bitcoin is haram, and it should remain banned in Pakistan. Firstly, because there is no legal tender, and the issuer is unknown. Secondly, it is used for illegal stuff and it’s more like gambling.”

However, the issue regarding the banning and unbanning of cryptocurrency can only be solved when the higher authorities take a serious dig into this matter. It should be solved by looking at all the aspects of the Islamic Finance System along with all the Principles of Transaction of cryptocurrency.


Considering the varied opinions expressed in interviews, it is evident that there is a divide in Pakistan regarding the legality and acceptance of cryptocurrency. Some argue that cryptocurrency aligns with Islamic finance principles as it meets the criteria of being a valuable medium of exchange, a measure of value, and a unit of account. Others contend that its uncertain nature and potential for misuse make it incompatible with Islamic principles.

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To address this issue effectively, it is recommended that an Islamic committee, well-versed in both Islamic finance principles and cryptocurrency technology, be established to thoroughly investigate and assess the compatibility of cryptocurrency with Islamic principles. This committee should consider the diverse perspectives and opinions surrounding the use of cryptocurrency in Pakistan.

In conclusion, the future of cryptocurrency in Pakistan hinges on a careful and comprehensive evaluation of its adherence to Islamic finance principles and its potential benefits and risks. By approaching this issue with transparency, knowledge, and a commitment to uphold Islamic values, Pakistan can make informed decisions regarding the adoption and regulation of cryptocurrency in the country.


  • Abu Bakar, N., Rosbi, S., & Kiyotaka, U. (2017). Cryptocurrency Framework Diagnostics from Islamic Finance Perspective: A New Insight of Bitcoin System Transaction. International Journal of Management Science and Business Administration, 4, 19–28.
  • Abu-Bakar, M. M. (2018). Shariah Analysis of Bitcoin, Cryptocurrency, and Blockchain.
  • Almajali, D. A., Masa’Deh, R., & Dahalin, Z. M. d. (2022). Factors influencing the adoption of Cryptocurrency in Jordan: An application of the extended TRA model. Cogent Social Sciences, 8(1), 2103901.
  • Hasan, S. Z., Ayub, H., Ellahi, A., & Saleem, M. (2022). A Moderated Mediation Model of Factors Influencing Intention to Adopt Cryptocurrency among University Students. Human Behavior and Emerging Technologies, 2022, e9718920.
  • Saleh, A. A. I., Ibrahim, A. A., Noordin, M. F., & Mohadis, H. M. (2020). Factors Influencing Adoption of Cryptocurrency-based Transaction from an Islamic Perspective.

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The views and opinions expressed in this article/paper are the author’s own and do not necessarily reflect the editorial position of Paradigm Shift.

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