Shariah Ruling on NFT Ownership: Answer from Shariah Advisor

Shariah Ruling on NFT Ownership Answer from Shariah Advisor

“What is Shariah ruling on NFT ownership?” – a question that we get more than often. In order to provide the most comprehensive and accurate answer, we have asked our Shariah advisor to provide an answer for us. In the following, Shariah advisor Dr. Amjad Bangash provides the Shariah ruling on NFT ownership.

Things You Need to Consider when Reviewing NFT

When reviewing NFTs, one should consider whether NFTs have a lawful utility and benefit, and do not contain any Shariah non-compliant purpose. They should have tangibility and ownership of the underlying assets. Regarding the worth of NFTs, it is hard to recognize since NFTs have some features of “ Brand” which may have huge value due to the willingness of consumers to pay for it while may not have that much intrinsic value. Intangible items such goodwill, airtime, specific software, copyrights, etc are also a shariah acceptable class of assets, so we can consider this type of NFT as shariah-compliant provided they meet shariah criteria. Some of the examples of NFTs are Art, In-game items, media, ticketing, etc.

NFTs must not be anything which is unlawful in Shariah, and anything which does not provide any tangible benefit.

NFT also can not be in the form of anything sacred in Shariah which is impermissible to portray such as Allah, the Prophets (PBUH), and some kind of pictures, movies, games, art etc which are against Shariah.

Shariah Ruling on NFT Ownership

As per the review of NFTs, there is nothing wrong with using an NFT to prove ownership of the asset or using it to trade or earn a profit which is permissible. Rules of shariah are the same for trading in NFT and minting of NFT.

We can conclude the Shariah status of NFT is based on whether
or not the item for which ownership is being proven using the NFT is halal or haram. Moreover, some of the NFTs being in use are highly expensive without having any valuable use which is a waste of money. Therefore, such NFTs to be avoided.

Read more about the rationale behind the benchmark number of the Halal stock screening methodology here.

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