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 consists of both Halal and Haram elements. You can assess any digital currency from both technological and Islamic perspectives to check their Halalness. Islamic law provides a set of certain conditions that must be met for an asset to be considered Halal. The most important point is to check crypto’s halalness 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 can not be someone’s possession and stash for later use; thus, they can not be Mal.

Although cryptocurrency is not money in your pocket but a digital asset, it is worth something to all individuals and businesses. We can trade and exchange cryptos. You can exchange cryptocurrency as a means of payment. Usually, it is secure, quick, low in transaction cost. When someone purchases it, it will become someone’s possession. So, basically, we can consider them as Mal.

Individuals are usually interested in cryptocurrencies to earn profit. They can buy, hold, sell, or make short-term trades (e.g., minutes, hours, or days). Sharia does not consider crypto Haram unless it deals with impermissible activities related to 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.

Dar Iftaa’, Mesir Fatwa prohibits Cryptos such as bitcoin. This is because it consists of Jahalah, Gharar, and manipulation. It also potentially opens the door for engaging in illegal activities such as money laundering and tax evasion.

Meanwhile, Datuk Dr. Mohd Daud Bakar, the chairman of the Shariah Advisory Council of Malaysia, permitted the activities of cryptocurrencies, including Bitcoins. According to the Shariah Advisory Council of Malaysia, cryptos do not contain Gharar, but Khatar. Khatar is a form of risk that investors expect when investing. They argued that The volatility of Bitcoin is not an Illah (underlying cause) for the prohibition of Bitcoin.

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