Cryptocurrency in Islam

is it Halal or Haram?

Khalid Idris Jibril

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 Cryptocurrency in Islam
Is it Halal or Haram?

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Cryptocurrency in Islam: Is it Halal or Haram?

Khalid Idris Jibril

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 Acknowledgements
Completing the project "Cryptocurrency in Islam: Halal or
Haram?" has been a significant milestone in my personal
journey of understanding and exploration. This project would
not have been possible without the support and encouragement
of many individuals.
First and foremost, I would like to express my heartfelt
gratitude to Munir Isah, Abdulrasshid Halliru, Hussain
Muhammad Zakari and Muslim Sani Musa, whose insightful
advice and unwavering support have been invaluable
throughout this process. Your
encouragement and belief in the importance of this project have
been a driving force behind my efforts.
I am deeply thankful to the scholars and experts who generously
shared their knowledge and perspectives on both Islamic
finance and cryptocurrency. Their contributions have provided
a solid foundation for this research. Special thanks to our Key
Experts and Scholars for their time and invaluable insights.
I also extend my sincere appreciation to my friends and family.
To my parents, Idris Jibril Idris and Abdulyasar Nagambo Uba,
thank you for your continuous support and for always believing
in my abilities. Your love and encouragement have been my
greatest motivation.
To my friends, Sadiq M. Auwal, Nura Halliru, Sadiq Umar
Usman, Hajara Bala and other’s, thank you for your patience,
understanding, and for always being there to offer a listening
ear and constructive feedback. Your support has been

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instrumental in helping me navigate the challenges of this
project.
Lastly, I would like to thank everyone who took an interest in
my work and provided me with valuable feedback and
suggestions. Your input has greatly enriched this project and
helped me to achieve a more comprehensive understanding of
the topic.
This project is a culmination of the collective efforts and
support of many people, and I am deeply grateful to each and
every one of you.

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 Foreword
In an age of rapid technological progress and digital
transformation, the emergence of cryptocurrencies has sparked
both excitement and debate. These decentralized digital assets
offer innovative solutions for financial transactions, yet they
also raise important questions, particularly regarding their
alignment with ethical and religious principles. As someone
deeply interested in both technology and Islamic finance, I
embarked on the project "Cryptocurrency in Islam: Halal or
Haram?" to explore this complex and timely issue.
This project was born out of a personal desire to understand
how modern financial innovations like cryptocurrencies can
coexist with the timeless values and principles of Islam. For
Muslims around the world, ensuring that financial practices
comply with Sharia law is essential. The challenge lies in
deciphering whether the characteristics of cryptocurrencies
align with the core tenets of Islamic finance, such as the
prohibition of riba (interest), gharar (excessive uncertainty),
and maysir (gambling).
Throughout this exploration, I have delved into various sources
of information, including insights from Islamic scholars,
financial experts, and extensive literature on both
cryptocurrency and Islamic finance. My goal has been to
provide a well-rounded perspective that addresses both the
potential benefits and the ethical considerations of using digital
currencies.
This foreword marks the beginning of a journey through the
intersection of faith and technology. It is my hope that this
project will serve as a valuable resource for individuals seeking
to make informed and ethically sound financial decisions. By

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examining the principles of Islamic finance and contrasting
them with the operational mechanisms of cryptocurrencies, I
aim to offer clarity and guidance on this important topic.
I extend my heartfelt gratitude to all who have supported and
contributed to this project. Your insights, encouragement, and
feedback have been instrumental in shaping this work. May this
project contribute to a deeper understanding and foster
meaningful discussions within our communities.

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 Preface
The world of cryptocurrency has fascinated and intrigued many,
offering unprecedented opportunities and posing complex
questions. As someone deeply interested in both technological
advancements and ethical considerations, I embarked on the
project
"Cryptocurrency in Islam: Halal or Haram?" to explore how
these innovative financial instruments align with Islamic
principles.
This project stems from a personal quest to understand how the
rapid evolution of digital currencies fits within the framework
of Islamic finance. For Muslims around the globe, navigating
financial decisions requires not only understanding the
technical aspects of cryptocurrencies but also ensuring that
these decisions comply with Sharia law. The intersection of
faith and technology presents unique challenges, and it is this
intersection that my project aims to explore. Throughout this
journey, I have engaged with various sources, including Islamic
scholars, financial experts, and extensive literature on both
cryptocurrency and Islamic finance. The goal has been to
provide a balanced view that reflects both the potential benefits
and the ethical considerations surrounding the use of digital
currencies. By examining the core principles of Islamic
finance—such as the prohibition of riba (interest), gharar
(excessive uncertainty), and maysir (gambling)—and
comparing these with the operational characteristics of various
cryptocurrencies, I hope to offer clear insights and guidance.
This project is not just an academic exercise but a practical
guide for those who, like me, seek to make informed financial
decisions that are ethically sound. It is my hope that this work

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will serve as a valuable resource for anyone interested in
understanding the compatibility of cryptocurrency with Islamic
values.
I would like to express my gratitude to everyone who has
supported me throughout this endeavor. Your insights,
encouragement, and feedback have been invaluable in shaping
this project. May this work contribute to a broader
understanding and foster informed discussions within our
communities.

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Contents
Introduction......................................................................... 13
Understanding Cryptocurrency ............................................ 14
2.0 Definition and Overview............................................ 14
2.1.1Key Characteristics .............................................. 14
Islamic Financial Principles ................................................. 16
3.1 Prohibition of Riba (Interest)...................................... 16
3.2 Avoidance of Gharar (Uncertainty) ............................ 16
3.3 Prohibition of Haram Activities ................................. 16
3.4 Risk and Profit Sharing .............................................. 17
Scholars' Perspectives on Cryptocurrency ............................ 18
4.1 Halal (Permissible) .................................................... 18
4.2 Haram (Forbidden) .................................................... 18
4.3 Conditional Permissibility .......................................... 19
Scholarly Opinions and Fatwas ............................................ 20
5.1 Scholars who consider cryptocurrency halal ............... 20
Mufti Muhammad Abu-Bakar ...................................... 20
Monzer Kahf ............................................................... 20
Islamic jurists in South Africa ...................................... 21
5.2 Scholars who consider cryptocurrency haram ............. 21
Shaykh Haitham al-Haddad.......................................... 21
Majlis Ulama Indonesia (MUI) .................................... 22
Dr. Mohamad Akram Laldin ........................................ 22

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 Sheikh Dr. Muhammad Taqi Usmani ........................... 22
Syrian Islamic Council................................................. 23
Egypt’s Grand Mufti .................................................... 23

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 1

Introduction
Cryptocurrency has emerged as a revolutionary financial
technology, sparking debates across various sectors, including
the Islamic community. Muslims worldwide seek guidance on
whether engaging in cryptocurrency is permissible (halal) or
forbidden (haram) according to Islamic law (Sharia). This
project explores the nature of cryptocurrencies, examines
Islamic financial principles, and presents the views of
contemporary scholars on the matter.

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 2
Understanding Cryptocurrency
2.0 Definition and Overview
Cryptocurrency is a digital or virtual form of currency that uses
cryptography for security. Unlike traditional currencies issued
by governments, cryptocurrencies operate on decentralized
networks based on blockchain technology. Bitcoin, Ethereum,
and Ripple are among the most well-known cryptocurrencies.

2.1.1Key Characteristics

 Decentralization
No central authority controls cryptocurrencies.
Transactions are verified by network nodes through
cryptography and recorded in a public distributed
ledger called a blockchain.
 Blockchain Technology
Blockchain is a system of recording information in a
way that makes it difficult or impossible to change,
hack, or cheat the system. Each block in the chain
contains a number of transactions, and every time a
new transaction occurs, a record of that transaction is
added to every participant's ledger.

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  Anonymity and Transparency
Users can transact pseudonymously, meaning they can
use cryptocurrencies without revealing their identities.
However, all transactions are transparent and can be
viewed on the blockchain.
 Volatility
Cryptocurrency values can be highly volatile, with
prices fluctuating widely in short periods. This
volatility is partly due to speculation, market demand,
and regulatory news.
 Utility and Acceptance
Cryptocurrencies can be used for various purposes,
from payments to investment. Some businesses accept
them as a form of payment, and they are also used in
decentralized finance (DeFi) applications.

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 3
Islamic Financial Principles
Islamic finance is guided by principles derived from the Quran
and Hadith, emphasizing justice, fairness, and avoiding harm.
Key principles include

3.1 Prohibition of Riba (Interest)

Earning or paying interest is forbidden. This principle aims to
promote fairness and equity in financial transactions.

3.2 Avoidance of Gharar (Uncertainty)

Transactions with excessive uncertainty or ambiguity are not
permissible. Islamic finance promotes clear and transparent
dealings to prevent exploitation and fraud.

3.3 Prohibition of Haram Activities

Investments in businesses related to alcohol, gambling, and
other forbidden activities are not allowed. Ethical and moral
considerations are paramount in Islamic finance.

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3.4 Risk and Profit Sharing
Islamic finance encourages profit and loss sharing
arrangements, such as Mudarabah (profitsharing) and
Musharakah (joint venture), where parties share risks and
rewards equitably.

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 4
Scholars' Perspectives on Cryptocurrency
Islamic scholars have varying opinions on the permissibility of
cryptocurrencies. Their views can be broadly categorized into
three positions: Halal (permissible), Haram (forbidden), and
Conditional Permissibility.

4.1 Halal (Permissible)

Some scholars argue that cryptocurrencies are permissible,
provided they comply with Islamic principles.
 Utility and Acceptance
Cryptocurrencies can be used for lawful purposes,
similar to fiat currencies.
 Lack of Riba
Cryptocurrencies themselves do not involve interest.
 Transparency
Blockchain technology ensures transparency and can
reduce fraud.

4.2 Haram (Forbidden)

Other scholars view cryptocurrencies as impermissible due to
their association with various prohibited elements.
 Speculation and Gambling (Maisir)
The high volatility and speculative nature of
cryptocurrencies resemble gambling.

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  Uncertainty (Gharar)
The lack of intrinsic value and regulatory oversight can
lead to excessive uncertainty.

 Illicit Activities
Cryptocurrencies can facilitate illegal activities due to
their pseudonymous nature.

4.3 Conditional Permissibility

Some scholars take a middle-ground approach, suggesting that
cryptocurrency can be halal under certain conditions.
 Regulation and Oversight
Proper regulation and oversight can mitigate risks
associated with cryptocurrencies.

 Purpose of Use
Using cryptocurrencies for legitimate, halal purposes is
permissible, while speculative and illicit use is not.

 Compliance with Sharia

Cryptocurrency transactions must comply with Sharia
principles, avoiding interest, excessive uncertainty, and
prohibited activities.

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 5

Scholarly Opinions and Fatwas

5.1 Scholars who consider cryptocurrency halal
Mufti Muhammad Abu-Bakar
In his report, Mufti Abu Bakar concludes that Bitcoin is
"generally permissible" under Sharia law. He argues that
Bitcoin meets the Islamic definition of money and can be used
as a medium of exchange. However, he emphasizes that it
should not be used for investment purposes and warns against
Initial Coin Offering (ICO) scams. He also highlights the
importance of ensuring that cryptocurrency transactions are
conducted in a way that is compliant with Islamic principles,
such as avoiding usury and ensuring that the transaction is
settled on the spot.

Monzer Kahf
In 2014, Monzer Kahf, a prominent Islamic finance scholar,
deemed Bitcoin a legitimate medium of exchange. He argued
that Bitcoin has all the characteristics of money and can be used
as a store of value and a medium of exchange. He also noted
that Bitcoin's decentralized nature and lack of central authority
make it consistent with Islamic principles of economic justice.

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Islamic jurists in South Africa
In 2018, a group of Islamic jurists in South Africa issued a fatwa
declaring cryptocurrencies like Bitcoin permissible. They
argued that cryptocurrencies have become widely accepted and
are used as a medium of exchange, making them a legitimate
form of money.

5.2 Scholars who consider cryptocurrency haram

Shaykh Haitham al-Haddad
An Islamic scholar who has expressed reservations about
cryptocurrencies due to their speculative nature and potential
for facilitating illicit activities. He advises caution and
recommends that Muslims avoid engaging in cryptocurrency
transactions until further clarity is obtained. Sheikh Haitham al-
Haddad, a prominent Islamic scholar, has declared
cryptocurrency haram due to its speculative and manipulative
nature. He argues that cryptocurrency markets are highly
volatile and subject to manipulation, making them a form of
gambling, which is forbidden in Islam.

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Majlis Ulama Indonesia (MUI)
In 2021, Indonesia's top Islamic council, Majelis Ulama
Indonesia, issued a fatwa forbidding cryptocurrencies.
They argued that cryptocurrencies contain elements of
uncertainty, wagering, and harm, making them
impermissible in Islam. Indonesia's top Muslim clerical
body has declared cryptocurrencies haram due to elements
of uncertainty, wagering, and lack of legal support . Fatwa
Council of Egypt
The Dar al-Ifta, Egypt's primary Islamic legal institution, has
declared Bitcoin and other cryptocurrencies haram, citing
concerns over financial stability and illicit activities .

Dr. Mohamad Akram Laldin

Dr. Laldin, a prominent Islamic finance scholar, has expressed
reservations about cryptocurrencies, stating that most are not
acceptable in Islamic finance. He argues that cryptocurrencies
are not backed by tangible assets and are therefore not a
legitimate form of money.

Sheikh Dr. Muhammad Taqi Usmani

Sheikh Usmani, a renowned Islamic scholar, has declared
Bitcoin impermissible in Islamic finance. He argues that
Bitcoin is not a traditional currency and lacks tangible backing,
making it a form of speculative investment, which is forbidden
in Islam.

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Syrian Islamic Council
In 2019, the Syrian Islamic Council issued a fatwa declaring
cryptocurrencies like Bitcoin haram. They argued that
cryptocurrencies are high-risk ventures, have unknown
variables, fluctuating values, and resemble gambling, making
them forbidden in Islam.

Egypt’s Grand Mufti

In 2018, Egypt's Grand Mufti declared that Bitcoin should not
be traded. He argued that Bitcoin is a form of gambling and is
not a legitimate form of money.

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 6

Case Studies
6.1 Case Study 1
Use of Bitcoin in Islamic Finance
Some Islamic financial institutions are exploring the use of
Bitcoin for Sharia-compliant investments. For instance,
Malaysia's Finterra uses blockchain technology for Waqf
(endowment) management, demonstrating a potential for
integrating cryptocurrency into Islamic finance.

6.2 Case Study 2

Islamic Cryptocurrency Initiatives
Initiatives like OneGram and Halal Chain aim to create
cryptocurrencies that comply with Islamic principles. These
projects seek to ensure that their cryptocurrencies are backed
by physical assets and adhere to Sharia law.

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 7
Risks and Benefits of Cryptocurrency in
an Islamic Context
7.1 Potential Benefits
 Financial Inclusion: Cryptocurrencies can provide
financial services to unbanked populations.
 Transparency: Blockchain technology can enhance
transparency and reduce corruption.
 Innovation: Cryptocurrencies can drive financial
innovation and create new economic opportunities.

7.2 Associated Risks

 Volatility: High price volatility can lead to significant
financial losses.
 Regulatory Issues: Lack of regulation can lead to fraud
and other illegal activities.
 Speculation: Excessive speculation can be seen as akin
to gambling, which is prohibited in Islam.

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 8

Conclusion
The debate on whether cryptocurrency is halal or haram
remains ongoing among Islamic scholars. While some see
potential in its use within Sharia-compliant frameworks, others
highlight significant risks and uncertainties that conflict with
Islamic principles. Muslims interested in cryptocurrency
should seek guidance from knowledgeable scholars and
consider the purpose, manner, and regulatory context of their
involvement to ensure compliance with Islamic law.

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9 References
1. Mufti Muhammad Abu-Bakar's fatwa on
cryptocurrency: Blossom Finance.
2. Shaykh Haitham al-Haddad's views on cryptocurrency:
Islamic Finance Guru.
3. Majlis Ulama Indonesia (MUI) fatwa: MUI Official
Website.
4. Dar al-Ifta's ruling on Bitcoin: Dar al-Ifta Egypt.
5. Islamic Finance in Blockchain: Research on Islamic
Finance and Cryptocurrency.
6. OneGram Project: OneGram.
7. Halal Chain: Halal Chain.

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