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To answer the question are crypto futures halal or haram let's start with answering the question: what are futures contracts anyway?
A futures contract is a financial agreement in which a buyer agrees to purchase an asset at a predetermined price at a later date.
These contracts are frequently used with commodities and securities and more recently with cryptocurrencies.
For example, a Bitcoin futures contract may stipulate the following:
In a crypto futures contract, a financial obligation to buy or sell from a counterparty is established i.e. a debt, and therefore trading this debt is haram.
3. Cash Settlement
The majority of cryptocurrency futures are cash-settled.
Cash settlement means an investor takes cash instead of physical delivery of the underlying assets upon settlement of the futures contract.
This means the involvement of the asset itself is not required.
Consider the following example:
I own a cash-settled futures contract that obliges me to buy 1 Bitcoin for $35,000. If the price of Bitcoin is $36,000 on the date of delivery, my futures contract is worth $1,000 to me. To settle, the counter-party simply pays me the value of my contract, $1,000.
Alternatively, if the price of Bitcoin is $34,000 on the day of delivery, the value of my contract is -$1,000. To settle, I pay the counter-party $1,000.
This is no different from a bet between the counter-party and me wherein we agree that if the actual price of Bitcoin is below $35,000, I will pay them the difference, and if it's above $35,000, they will pay me the difference.
Simply put, with cash-settled futures contracts one party is betting the price goes up while the counter-party is betting the price goes down, and the existence of the asset is optional.
This is a form of prohibited Al-Maysir (gambling).
It meets the criteria for Al-Maysir which are:
Risk is being created without the prospects of any good or service being offered.
About Al-Maysir, the generous Quran says the following (translated into English):
O you who believe, intoxicants, Al-Maysir (gambling), sacrificing for idols and making decisions based on games of chance are sicknesses from the work of Satan, so avoid these things so you may prosper. Satan desires to create enmity and hatred among you through intoxicants and Al-Maysir and to stop you from praying and remembering Allah. So will you abstain from these things?
THE HOLY QURAN 5:90-91
Summary: Are Crypto Futures Halal or Haram?
Crypto futures often involve interest, trading futures contracts is riba, and cash-settled futures contracts with no asset requirement are al-maisir.
Futures trading is considered haram (forbidden) in Islamic finance and law (Shariah) for several reasons: 1. *Speculation*: Futures trading involves speculating on the future price of an asset, which is considered a form of gambling (Maysir).
Islamic banking laws are also anti-interest so the technology, pricing, and buying and selling of cryptocurrency money is deemed halal by many Islamic scholars who rely on the teachings of Prophet Muhammad PBUH when seeking guidance about permissibility (ultimately, only Allah knows best).
Arguably, the cryptocurrency system can involve both Halal and Haram elements. You can assess any digital currency from both technological and Islamic perspectives to check their Shariah-compliance. Islamic law provides a set of certain conditions that must be met for an asset to be considered Halal.
Some scholars argue that cryptocurrencies fail to meet the criteria for being considered as money under Shariah due to their lack of intrinsic value, the anonymity of ownership, and their instability.
Some pupils agree with that options trading is permissible, at the same time as others trust it isn't. The majority of Islamic students accept as true with that margin trading, day trading, alternatives, and futures are forbidden by using sharia.
Cryptocurrency futures are contracts between two investors who bet on a cryptocurrency's future price, giving them exposure to cryptocurrencies without purchasing them. Crypto futures resemble standard futures contracts because they allow you to bet on the price trajectory of an underlying asset.
Trading is considered halal in Islam if it adheres to Islamic financial guidelines, such as avoiding transactions involving interest (Riba), excessive uncertainty (Gharar), gambling (Maysir), and trading in haram (forbidden) items.
Among the major meme coins, Dogecoin is considered halal by the paper, while the Shiba Inu (SHIB) token is haram. However, with recent Solana launches largely underperforming or rug pulling, many would consider tokens such as Book of Memes haram due to their close similarity with gambling.
Therefore, it is not a valueless activity. Hence, staking cryptocurrencies is not haram. Nevertheless, Muslims are advised to do their due diligence when it comes to staking crypto. It is important to verify that the crypto project itself complies with sharia law before staking its coins.
However, if the tokens being airdropped originate from a cryptocurrency project that has already been deemed non-Shariah compliant due to violating rules around interest, prohibited trade activities, or other Shariah violations, then receiving those airdropped tokens for free would likewise be impermissible for Muslims ...
"Crypto in general is halah to buy, sell or keep as an asset, but for binance (or any other exchange) only spot trading is halal, so margin trading, futures, staking, defi staking, earn services, loans, dual investments, borrowing ALL are Haram, and binance in particular even for normal staking gives you the rewards + ...
The Islamic Finance Guru believes that cryptocurrency is Sharia-compliant, in principle. According to their Sharia policy, they view crypto as a true currency, or as a digital asset. They also recommend that Muslim crypto traders check each crypto purchase or project individually to decide whether it's halal or haram.
Gharar is generally prohibited under Islam, as there are strict rules in Islamic finance against transactions that are highly uncertain or that may cause any injustice or deceit against any of the parties. Is Bitcoin permissible in Islam? As a payment network YES, Bitcoin is halal.
Blockchains can allow for secure, permissionless, decentralized storage of information and facilitation of transactions. But these distributed databases tend to face limitations in at least one of three vital areas: security, scalability, or decentralization.
The Futures transaction as in vogue in stock and commodities markets today are not permissible for two reasons. Firstly, it is a well recognised principle of the Shariah that sale or purchase cannot be affected for a future date. Therefore, all Forward and Futures transactions are invalid in Shariah.
It is important to remember that whilst gold trading is deemed to be halal, speculative trading or gambling of any nature is not permissible in Islam. For example, gold trading that involves futures and options contracts which usually involve elements of speculation could be deemed to be haram.
e.g., “Since crypto is volatile and unpredictable, it is essentially a gamble when you invest in it as you could win big or you could lose everything you put in.”
Proponents of crypto in the Islamic finance marketplace say crypto trading is Halal as the currencies serve as a transactional medium of exchange for the purposes of purchasing legitimate goods and services. They also cite crypto's ability to increase financial inclusion and reduce corruption and fraud.
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