Is Cryptocurrency Halal or Haram in Islam?
We explored what some of the most trusted Islamic scholars and authoritative sources say about cryptocurrency. We also included the viewpoints of those who oppose cryptocurrency, claiming it is not halal, to provide a balanced perspective.
Our goal is to equip you with the information needed to make the most informed decision on whether cryptocurrency aligns with Islamic principles.
The Islamic Debate on Cryptocurrency
Some Islamic scholars argue that cryptocurrency is halal because they view it as a commodity or store of value. On the other hand, other scholars consider it haram due to its volatility, lack of regulation, and classification as neither a traditional currency nor a stable asset.
This divide within the Islamic scholarly community reflects the complexity of cryptocurrency, both as an emerging technology and as a financial tool.
What Is Cryptocurrency?
Cryptocurrency refers to a form of digital currency that operates independently of any central bank. Secured by cryptography, it is almost impossible to counterfeit or double-spend.
The backbone of most cryptocurrencies is blockchain technology, a decentralized network designed to record and verify transactions.
Well-known cryptocurrencies include Bitcoin, Ethereum, and Dogecoin, each serving distinct purposes. For example, Ethereum facilitates smart contracts, while Bitcoin is primarily seen as a decentralized digital currency.
Some cryptocurrencies, known as altcoins, have specific use cases. Basic Attention Token (BAT), for example, is used to reward attention in digital advertising, while Ripple (XRP) aims to facilitate global payments.
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Potential Impact of Cryptocurrency
Many industry experts believe cryptocurrency will disrupt multiple sectors, including finance, law, and banking. While the technology behind cryptocurrencies promises revolutionary changes, it also faces significant criticism.
Detractors point to its use in illegal activities, such as purchasing haram substances like drugs, and its price volatility, which can lead to significant financial loss.
This dichotomy raises the question for many Muslims: is engaging with cryptocurrencies permissible (halal) or forbidden (haram) according to Islamic law?
Scholarly Opinions: Is Cryptocurrency Halal or Not?
1. Shaikh & Dr. Abu Ammar Yasir Qadhi on Cryptocurrency
One of the first Islamic scholars we looked into is Shaikh and Dr. Abu Ammar Yasir Qadhi, a well-known Pakistani-American preacher and imam.
He holds a Bachelor’s degree in hadith and Islamic studies from the Islamic University of Madinah, a Master’s in Islamic Creed, and a PhD in Islamic Studies.
Shaikh Yasir Qadhi issued a fatwa stating that cryptocurrency can be considered halal—though not all types of cryptocurrencies are permissible.
His fatwa was based on reviewing various fatawas from scholars worldwide, including those that held opposing views. In his reasoning, the fundamental Islamic principle of law is that something is halal unless proven haram.
He refuted one of the main criticisms of cryptocurrency, which is its supposed lack of inherent value. Drawing an analogy, he explained that value is often subjective.
For instance, baseball cards may seem worthless to some, but collectors place high value on rare cards, paying substantial amounts for them. In this way, he argued, cryptocurrency can also have value based on what people are willing to pay for it.
However, Shaikh Yasir Qadhi made a critical distinction: using cryptocurrency for immediate transactions and mining is permissible, but holding it as an investment for future gains is not.
This mirrors similar rulings applied to fiat currency. His fatwa also mainly focused on major cryptocurrencies like Bitcoin and Ethereum, noting that some altcoins are used for haram activities, such as gambling.
2. Shaikh Assim Bin Loqman Al-Hakeem on Cryptocurrency
Shaikh Assim Bin Loqman Al-Hakeem, a prominent Islamic scholar, offered a different perspective. A graduate of Umm al-Qura University in Makkah, he has been an imam in Jeddah for over two decades and frequently lectures on Islamic sciences.
Shaikh Al-Hakeem concluded that cryptocurrencies, including Bitcoin, are haram for several reasons. First, he criticized the lack of physicality since cryptocurrencies exist only in the virtual world.
Second, he cited the absence of regulatory oversight, comparing cryptocurrency to a pyramid scheme due to its ambiguous nature and speculative nature.
He also argued that cryptocurrency opens the door to haram activities such as money laundering and ransomware payments.
Furthermore, because cryptocurrency transactions are not always simultaneous, they can lead to uncertainty, which is discouraged in Islamic finance.
3. IslamicFinanceGuru on Cryptocurrency
IslamicFinanceGuru is a resource hub for Muslims interested in personal finance, investments, and entrepreneurship.
While they did not issue a fatwa, they provided an analysis based on their research and conversations with experts, ultimately classifying cryptocurrency as halal.
They acknowledged the diversity of opinions within the Muslim community, especially concerning altcoins used for haram purposes.
IslamicFinanceGuru recommended conducting thorough research and due diligence before making any decisions.
Their stance was that, although cryptocurrencies are permissible in principle, one must be cautious about specific projects that may not align with Islamic values.
4. Mufti Mohammed Ataur Rahman Sajid on Cryptocurrency
Mufti Mohammed Ataur Rahman Sajid, another prominent scholar, offered a stricter viewpoint. He declared that Bitcoin and other digital currencies are not halal.
His reasoning stemmed from the belief that cryptocurrencies are “imaginary currencies” and fail to meet the criteria for real currency according to Shariah.
Mufti Sajid further emphasized that most cryptocurrency transactions do not involve actual buying or selling but instead resemble forms of interest or gambling, both of which are forbidden in Islam.
His fatwa, which referenced rulings from Darul-Ifta Darululoom Deoband and Jamia Uloom Islamiyah, rejected cryptocurrencies as haram due to their speculative and ambiguous nature.
Final Thoughts
The question of whether cryptocurrency is halal or haram is complex and remains a topic of debate among Islamic scholars.
While some view cryptocurrency as a permissible store of value, others criticize its volatility, lack of real-world use cases, and potential to facilitate illegal activities.
Scholars who view it as halal generally argue that something is permissible unless proven otherwise by Shariah, while those who view it as haram highlight its speculative and ambiguous nature.
One thing that seems clear from our research is that cryptocurrency transactions should be conducted immediately rather than holding for speculative future gains.
Holding cryptocurrency for an indefinite period with hopes of future appreciation aligns with gambling, which is prohibited in Islam.
As always, we encourage you to use this information as part of your broader research to make an informed decision. Be sure to consult scholars or financial experts who specialize in Islamic finance for more personalized guidance.
