Cryptocurrency: Haram or Halal? 2 Things You Should Know

Is Cryptocurrency Haram_

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. We recommend conducting your own research before engaging in any transaction involving cryptocurrencies. Your understanding and caution are greatly appreciated.

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