When it comes to consumer affairs, Muslims worldwide pay attention and are concerned about whether those consumables are Halal or not? This has been mainly applied to food items; there are other diversifications too subjected to the question being asked. There is no simple answer to the question Is Cryptocurrency Halal? However, there are different schools of thought with various arguments that continue to debate this matter. In this blog post, we will endeavor to clarify many of your doubts on the question, is cryptocurrency halal?
What do you mean by Halal and Haram?
Halal and Haram are a broad category in which items are divided according to Muslims in accordance with Islam. Halal refers to all things permitted for Muslims, and Haram is everything considered illegal or prohibited in the eyes of Islam. It is commonly believed that Halal and Haram are only applicable to food items. However, this is not the case, and both do not only apply to food restrictions but also to all other aspects of life, including marriage, speech, behavior and conduct, and more.
How does cryptocurrency gain the attention of Muslims?
A cryptocurrency is a digital form of currency based on blockchain technology. This technology has evolved rapidly during the last decade, and at present, there are more than 2000 forms of cryptocurrencies in the market. Bitcoin, being the most popular one, gained a lot of attention across the merchant community in the world. The rapidly evolving cryptocurrency market gained the attention of Muslims around the world, and they have started to invest in the cryptocurrency business. According to Shazia Hussain, there was a massive rise in the Muslim community who invested in Bitcoin and Ethereum in 2018. This rise led to the ambiguity for Muslims to ponder the question, is cryptocurrency halal?
Is cryptocurrency Halal?
Several schools of thought in Islam hold different opinions on the question, is cryptocurrency halal? Let’s look at the different ideologies these different fractions of Islam maintain on cryptocurrency.
Cryptocurrency is Halal
Sharia advisor Mufti Muhammad Abu-Bakar asserts that despite the speculations inherently associated with cryptocurrencies and blockchain technology, it is permissible for Muslims under Islamic laws. He further argues that the inherent qualities of cryptocurrencies do not qualify to become Haram in the eyes of Allah. Therefore, by giving the benefit of the doubt to the consumers, of course, with the permission of Allah, Abu-Bakar deemed that cryptocurrency is halal; thus, Muslims can invest in them.
Most of the Islamic scholars who back the statement cryptocurrency is halal mainly highlight one of the main qualities of cryptocurrency. That is, cryptocurrency is inherently anti-inherent. According to Islamic laws, finance that is associated with interests is Haram. Therefore, scholars believe that the anti-interest cryptocurrency trade is not Haram and automatically qualifies as halal in the eyes of Allah.
Cryptocurrency is Haram
Australian Halal loans experts Hejaz Financial Services explain that cryptocurrencies are speculative, and it has no physical form. Moreover, cryptocurrency can catalyze illegal trades due to the non-availability of definite value and no physical condition of the transaction. Scholars who assert that cryptocurrency is Haram qualify their argument because cryptocurrency is often used for gambling and illegal trade activities; thus, it is Haram.
Recently, Indonesia banned all forms of transactions using cryptocurrency. The banning was imposed on the advice of Indonesia’s Ulama Council.
“Cryptocurrency as currency is forbidden because it has elements of uncertainty, harm and doesn’t meet the Islamic requirement according to Shariah [law],” KH Asrorun Niam Sholeh, the council’s head of religious decrees, said in an online forum.
They further declared that if the cryptocurrency meets the Islamic requirements, they could lift the ban in the future. Those “requirements” entail qualities such as physical form and definite value.
Strategies to avoid speculations
The growing crypto market has recognized the opportunities in the Middle East and other Muslim-heavy regions for cryptocurrency and is trying to find strategies to overcome this dilemma. To give a physical form to cryptocurrency, one start-up company called OneGram, located in Dubai introduced a cryptocurrency associated with one gram of gold. It is conventional wisdom that Arabs are fond of trading with gold, and gold has been primarily one of the oldest elements of trading in ancient times. Since the currency has a physical form, it conforms to the Shariah laws, thus qualifying the halal status.
Another company, HelloGold in Malaysia, a country with a predominantly Muslim population, also introduced a similar type of cryptocurrency with a physical element in gold. The company obtained the approval of Amanie Advisors (Malaysian Ulama Council) to use it for business.
It is complicated to give a direct answer to whether cryptocurrency is halal due to the different thoughts of prevailing Islamic schools. However, it is clear that in some regions, Muslims are allowed to trade and invest in cryptocurrency, and in some areas, they are not. Therefore, it is advisable to be aware of those regions and study their case by case if you are willing to invest in cryptocurrency in a Muslim majority country.