Bitcoin’s rising popularity – alongside other cryptocurrencies and digital assets – continues to grab headlines and tempt would-be investors all over the world. However, crypto trading and asset retention remains a complex business! Is Bitcoin halal or haram, for example?
Below, we’ll take a look at a possible answer to this conundrum – and whether or not Bitcoin is considered forbidden under Sharia laws.
Is Bitcoin halal?
There are several schools of thought, and fatwas, discussing crypto trading’s place in line with Sharia laws. The general consensus is that Bitcoin trading and retention are open to interpretation within the laws of Islam – with many Muslim scholars claiming that, as cryptocurrency is technically property, it is permissible to hold and sell on within Sharia laws.
Typically, Bitcoin and other cryptos may be considered halal until proof – or transactions at either end of the trade – veer into haram territory. For example, when used for trading haram comestibles, in banned activities or forbidden goods, the currency itself – and the transaction – may too become haram.
Noted scholars and Sharia advisers, such as Mufti Muhammad Abu-Bakr, claim that Bitcoin should be considered halal on the grounds of other permitted currencies being speculative. Furthermore, some mosques based in the UK openly accept cryptocurrency donations.
Is Bitcoin haram?
However, others are not so sure that Bitcoin’s status is so cut and dried. For example, ancient Islamic rules state that Muslims are forbidden from earning interest. This has led to some confusion, and much debate, over whether or not crypto trading is ethical full stop.
Imam Ibn Taymiyyah, for example, states that currencies oppose Sharia laws when they are inter-traded ‘for investment and profit’. Interest in all forms is considered exploitative within Islamic law, as are investments deemed to carry an element of risk.
Dr Ziyaad Mahomed, meanwhile, further states that the volatile, fast-paced nature of crypto trading creates potentially risky circumstances for traders – thus, we might interpret this to be haram. However, Dr Mahomed further states that as Sharia laws don’t place specific values on currencies, the wider Muslim community is open to applying a broad consensus on Bitcoin’s place.
Why is the debate so complex?
Much of the problem surrounding Bitcoin and Islamic laws stems from the fact that it’s not physical currency. What’s more, not everything traded via Blockchain, on which Bitcoin is based, may be considered currency at all! Some assets are hybrid by design.
Additionally, there are some fatwas that claim the digital platform of Bitcoin and other cryptocurrencies effectively makes them non-existent. To muddy the waters even further, Sharia laws do take intangible asset trading into account!
Will there ever be an answer?
At the time of writing, the question as to whether or not Bitcoin is halal or haram is up for debate. Cryptocurrencies in general are still being studied and analysed not only by Sharia experts, but by governments and financial managers all over the world. At present, Bitcoin trading is debatably halal – but its status otherwise revolves around your interpretation and those of scholars you follow.
What’s more, there is yet to be an official framework drawn up to address Bitcoin and other crypto’s places in Sharia laws. The official answer for now, therefore, is – no one’s particularly sure, and it really comes down to your own judgement.
