Tether Gold Wins Shariah Approval as Scholars Split on Crypto

Tether Gold’s XAU₮ token cleared a Shariah compliance review this week, giving Islamic banks and investors a certified path into blockchain based gold ownership. Amanah Advisors, a UK based Islamic finance advisory firm led by Mufti Faraz Adam, ran the review. Tether announced the approval on July 27.

The timing is awkward. Weeks earlier, Pakistan’s most senior Islamic scholar signed a fatwa ruling that cryptocurrencies, tokens and stablecoins, USDT included, do not qualify as wealth under Islamic law at all. Two Shariah verdicts on Tether’s own product family, pointing in opposite directions, are now sitting in public view at the same time.

Amanah Advisors Signs Off on Gold, Not Crypto Broadly

XAU₮ is issued by TG Commodities, S.A. de C.V. Each full token represents direct ownership of physical gold held in Swiss vaults, giving holders allocated bullion exposure through blockchain rails rather than a paper claim.

Amanah Advisors’ review checked the token against specific Islamic finance tests before signing off. Its assessment covered:

• Real ownership – each token ties to allocated gold bars, not a synthetic price bet
• Transparent reserves – the backing gold is verifiable rather than opaque
• No riba – the structure carries no interest bearing mechanism
• No leverage or derivatives – the token avoids speculative structures Islamic finance treats as excessive uncertainty

Mufti Faraz Adam is a UK based Islamic finance and fintech consultant who leads Amanah Finance Consultancy and has advised financial institutions across the UK, US, Malaysia, Singapore and the UAE. His firm’s approval does not extend to Bitcoin, Ethereum or Tether’s own USDT. It applies to XAU₮’s specific ownership and custody structure alone.

Ledn Turns the Certification Into Collateral

Tether has already moved to put XAU₮ to work beyond simple holding. The company partnered with crypto lender Ledn to let XAU₮ holders post tokenized gold as collateral for loans, extending the asset into lending and liquidity markets while keeping the physical gold backing unchanged.

Tether has flagged the Gulf Cooperation Council states, South Asia and parts of Africa as regions where the certification could matter most, since each combines longstanding cultural demand for gold with fast growing digital finance adoption. Africa is also where Tether has been building out compliance credentials on a separate front, joining the United Nations on an initiative against crypto enabled crime across the continent.

Tether CEO Paolo Ardoino framed the certification as an extension of gold’s traditional role rather than a new pitch.

Gold has always represented stability and trust across cultures and generations.

Ardoino added that Shariah recognition lets Tether widen access to digital gold while staying inside Islamic finance principles. The company’s broader roadmap also includes Bitcoin native transfer infrastructure through the RGB protocol, which combines Bitcoin’s UTXO model with client side validation and Lightning Network support for faster, more private transfers. For XAU₮ specifically, the company says the focus stays narrow: physical gold ownership, tokenized for access, nothing more.

A Different Verdict Came Out of Karachi

The contrast sits in a fatwa dated 24 Zilhaj 1447 AH, or June 10, 2026, issued by Darul Ifta at Jamia Darul Uloom Karachi. Mufti Muhammad Taqi Usmani, president of Wifaq ul Madaris Al Arabia Pakistan and Darul Uloom Karachi, a former judge of the Federal Shariat Court who helped shape the AAOIFI Shariah standards followed across Islamic banking, signed it along with several other scholars.

The ruling holds that cryptocurrency does not meet the Islamic definition of wealth or property, describing it instead as entries recorded in a digital account. Coverage of the fatwa states plainly that the prohibition applies whether the asset is a crypto token or a stablecoin such as USDT. A fatwa carries no force of law, and regulated crypto activity in Pakistan remains legal. But Usmani’s standing across Islamic finance means the ruling could weigh on how retail users in Muslim majority markets treat stablecoins already used widely as an inflation hedge.

Bilal Bin Saqib, chairman of Pakistan’s Virtual Assets Regulatory Authority (PVARA), met Usmani afterward and called the exchange a constructive discussion with Mufti Taqi Usmani sahib on digital assets. Saqib argued that blockchain infrastructure, stablecoins and tokenized real world assets are distinct technologies that deserve separate technical and Shariah review rather than a single blanket ruling.

Do Islamic Scholars Even Agree on Crypto?

No. Rulings differ by country and by scholar, with no single global Shariah authority holding final say over digital assets. Egypt’s Grand Mufti has ruled crypto impermissible. Scholars in South Africa have accepted it as a legitimate medium of exchange. The Fiqh Council of North America has called Bitcoin essentially halal with conditions. Amanah Advisors, meanwhile, certified one specific gold backed token rather than crypto as a category.

That split is the actual state of the field right now, not a footnote to it.

• Amanah Advisors (Mufti Faraz Adam): certified XAU₮’s gold ownership structure as Shariah compliant, citing transparent reserves and no interest bearing features
• Darul Ifta, Jamia Darul Uloom Karachi (Mufti Taqi Usmani and co-signers): ruled cryptocurrencies, tokens and stablecoins including USDT do not qualify as Shariah recognized wealth
• Fiqh Council of North America: holds that Bitcoin is essentially halal, provided it is acquired honestly and zakat obligations are met
• Egypt’s Grand Mufti: has ruled cryptocurrency trading impermissible

The Fiqh Council’s published ruling on Bitcoin notes that Muslims are commanded to be wise with their wealth even where an asset is technically permitted, a caveat that applies just as easily to a certified gold token as to Bitcoin itself.

A Crowded Field of Gold Tokens

XAU₮ is not the first gold backed token to chase Islamic finance users, and it is not the biggest by every measure either. Pax Gold, issued by Paxos Trust Company and regulated by the US Office of the Comptroller of the Currency, backs each token with one fine troy ounce of a London Good Delivery gold bar held in professional vaults and audited monthly. At least one industry comparison already lists Comtech Gold, a smaller token, as built specifically around Shariah compliance from launch, rather than certified after the fact.

The comparison matters because a certification is not a market share guarantee. Islamic banks and takaful providers weighing tokenized gold now have more than one option carrying some form of religious sign off, and Tether is competing on liquidity and distribution as much as on paperwork.

The Trillion Dollar Market Tether Wants

The prize is large by any measure. Global Islamic finance assets are projected at $4.53 trillion in 2025, according to a market size report from Mordor Intelligence, climbing toward $8.46 trillion by 2031 at a compound annual growth rate near 10.7%. Gold already sits at the center of that industry as a preferred store of wealth, which is precisely why a certified digital wrapper around bullion is more commercially useful to Tether than a certified wrapper around USDT would be.

Not every buyer cares about the paperwork, though. Daniel Foster, a New York based XAU₮ investor, questioned whether a religious certification changes anything for him personally.

I’m buying gold because it’s gold, Foster said.

Frequently Asked Questions

What Does Shariah Compliant Mean for a Crypto Token?

It means the token avoids riba, or interest bearing return, avoids gharar, or excessive speculative uncertainty, and represents real, verifiable ownership of an underlying asset rather than a synthetic bet. Reviewers also check that reserves are transparent and that the structure carries no hidden leverage.

Is Bitcoin Considered Halal?

There is no single answer. The Fiqh Council of North America has ruled Bitcoin essentially halal with conditions, while Pakistan’s Darul Ifta Jamia Darul Uloom Karachi and Egypt’s Grand Mufti have both ruled cryptocurrency trading impermissible. The split runs by country and by scholarly body, not by technology alone.

Do Islamic Wealth Rules Like Zakat Apply to Tokenized Gold?

Scholars who accept digital assets as Shariah compliant generally apply standard zakat rules to them. The Fiqh Council of North America’s guidance on Bitcoin holds that zakat becomes due once a full lunar year has passed and holdings exceed the nisab threshold, the same basic test long applied to physical gold.

Does a Fatwa Against Crypto Carry Legal Force?

No. A fatwa is a religious opinion, not legislation, and regulated crypto activity in Pakistan remains legal even after Mufti Taqi Usmani’s ruling. Its weight comes from the scholar’s standing, which can shape retail behavior even without changing the law.

Disclaimer: This article is for informational purposes only and does not constitute financial, investment or religious advice; gold backed tokens and crypto assets carry price, custody and regulatory risk, and readers should consult a qualified financial or Shariah advisor before acting, with figures accurate as of publication.