As a Muslim investor, you need to know whether cryptocurrency is Haram or Halal. 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. One of the most important points is to check crypto’s Shariah-compliance by assessing whether cryptos constitute Māl.
What is Māl?
According to Islamic law, a transaction must have something known as “Māl.” Māl generally means something that you can possess or store up for the time of need.For instance, birds in the sky cannot be someone’s possession and stash for later use; thus, they cannot be Mal.
Some argue that cryptocurrencies cannot be regarded as Māl as it does not constitute an entity with real existence that is purchased, stored or traded. According to others, although cryptocurrency is not money in your pocket but a digital asset, it is worth something to individuals and businesses. Having utilities in their ecosystem can make cryptos to be regarded as Māl. They consider crypto-assets as valid investment option unless it deals with impermissible activities, such as Riba, Maysir, and Gharar.
Different Views of Scholars
Islamic finance has a broad knowledge base and is developing globally. Hence, many scholars have produced different views. Cryptocurrency is relatively a new concept in Islamic Financial Industry, so there is always room for discussion.
Professor Ahmed Kamel Midin Meera (former dean of the Institute of Islamic Banking and Finance at the International Islamic University of Malaysia author of the book Islamic Golden Dinar) believes that a digital currency can be acceptable in Islamic finance only if it contains a measure of value that is a monetary commodity. It should carry a standard weight and should be redeemable with a standard weight such as gold.
Meanwhile, Sheikh Dr. Adnan Al-Zahrani (ex-chairman of the Shari’ah Supervisory Board of Al-Jazeera Bank) accepts cryptocurrencies as normal part of creating and developing money. According to him, what started with an ordinary barter evolved to gold and silver coins, then to paper money and now to virtual money (cryptocurrencies).
Disclaimer: Please note that Musaffa does not endorse or validate the permissibility of cryptocurrencies from a Shariah standpoint. Due to difference of opinions on Shariah compliance of cryptocurrencies, we recommend you to do your own further research. It is important to note that the blogs on our academy platform, as well as the answers provided, are not to be construed as fatwa. Our role is to compile information on various topics, including insights from scholars, to empower readers to make informed decisions.
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FAQs
For cryptocurrency trading to align with Shariah principles, it must adhere to specific guidelines outlined by Islamic finance experts. Transactions should avoid elements deemed haram (forbidden) in Islam, such as riba (interest), gharar (uncertainty), and maysir (gambling).
Is cryptocurrency haram or halal? ›
Some deem it haram, akin to riba, while others compare it to asset leasing, which is permissible. Staking could be halal if the cryptocurrency aligns with Islamic finance guidelines, avoids prohibited activities, and adheres to ethical principles.
Is Bitcoin halal or haram quora? ›
The permissibility of using Bitcoin from an Islamic perspective is a subject of debate among Islamic scholars. Some argue that it is permissible because it can be used as a medium of exchange and store of value, similar to conventional currencies.
Is crypto trading halal or haram islamqa? ›
It is permissible to deal in crypto currency, if the exchange takes place immediately and the transaction is free of any infractions of Islamic teachings, such as using financial leverages and dealing in differences, futures and so on.
Is crypto future trading halal or haram? ›
Many Islamic scholars and experts argue that futures trading is haram based on the following factors: Involves gharar (excessive uncertainty) – A key criteria for permissibility in Islamic finance is that a contract should not involve uncertainty or ambiguity about key terms and conditions.
How do I know if crypto is halal or haram? ›
Conditions for Permissibility
For cryptocurrency trading to align with Shariah principles, it must adhere to specific guidelines outlined by Islamic finance experts. Transactions should avoid elements deemed haram (forbidden) in Islam, such as riba (interest), gharar (uncertainty), and maysir (gambling).
Which trading is halal in Islam? ›
Investing in stocks of companies that operate in compliance with Islamic principles is generally considered halal. This involves selecting companies that avoid involvement in industries such as alcohol, gambling, and pork, aligning with ethical and Sharia-compliant business practices.
Which cryptos are halal? ›
Examples of halal cryptocurrencies include OneGram (OGC), backed by physical gold, X8X Token, supported by a basket of eight fiat currencies and gold, and HelloGold (HGT), another gold-backed digital currency.
Is crypto halal in 2024? ›
As it is, cryptocurrency is not considered halal by most practitioners, unless there is an acceptable underlying asset. Otherwise, it is worse than fiat currency. If that underlying asset is fiat currency, that is another issue. If it is contracts, such Ethereum, there is still some scepticism.
Is crypto haram hanafi? ›
Despite the claims of many religious organisations and Islamic academics, some Islamic scholars believe that bitcoins are halal, while others believe as haram.
Tether has claimed that USDT is backed by a reserve of U.S. dollars, and as such, it could be considered a sharia-compliant investment option.
Is crypto halal salafi? ›
Islam accepts Bitcoin's trustless asset
In this regard, the Salafist cleric from Saudi Arabia then spoke about “trust,” as it is from there that all the other rules that apply to current currencies such as paper money would then start.
Is Bitcoin haram mufti menk? ›
What are Mufti Menk's views on investing in Bitcoin? Mufti Menk said, there is nothing haram about Forex or crypto.
What is cryptocurrency haram? ›
Islamic scholars have different perspectives on what is Sharia-compliant. Some schools deny cryptocurrencies, while some others have accepted it. Recently, the Egyptian Grand Mufti has declared Bitcoin as haram on grounds of gambling and money laundering.
Is binance haram in Islam? ›
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 + ...
Is shorting crypto halal? ›
Taqi Usmani gives short selling as an example of an economic activity banned according to "divine restrictions". According to Humayon Dar (CEO of a shari'ah advisory firm), there is "no dispute by all main scholars" that short selling is haram.
Is binance halal in Islam? ›
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 + ...
Is Shiba Inu halal or haram? ›
The study was conducted by Shahad Z. Al-Khalifa, a student of the College of Computer and Information Sciences at King Saud University. Among the major meme coins, Dogecoin is considered halal by the paper, while the Shiba Inu (SHIB) token is haram.
