Many Islamic scholars and financial experts argue that cryptocurrency and crypto trading are permissible based on the following factors:
Cryptocurrencies Have Real Economic Value
“Cryptocurrencies have a real world value and are bought and sold like other valued commodities.” – Source
Unlike gambling or speculation, cryptocurrencies can be used as a medium of exchange and have practical utility. Muslims who accept this view believe cryptocurrencies are halal to trade.
Cryptocurrency Enables Ethical Practices
Proponents argue cryptocurrencies can encourage ethical behaviors in finance:
- Transparency in transactions (source)
- Honesty through an immutable ledger
- Fairness by avoiding state manipulation
“Many Muslims see bitcoin as a fairer, more halal alternative to fiat currency.” – Source
Cryptocurrencies Avoid Riba
Cryptocurrencies do not involve riba (interest), which is prohibited in Islam. This makes crypto more halal than fiat currencies with interest-based banking.
“One of the main factors which makes trading Cryptocurrencies Halal is that it avoids riba (usury/interest).” – Source
Given these points, many Muslims argue cryptocurrency and crypto trading should be considered permissible.
The Case Against Crypto Being Halal
However, some Islamic scholars and institutions argue cryptocurrency and crypto trading are haram based on the following factors:
Cryptocurrencies Enable Excessive Risk
Critics argue cryptocurrencies involve extreme uncertainty (gharar) which Islam prohibits:
- Prices are highly volatile
- Lack of intrinsic value
- Vulnerable to pump and dump schemes
“The lack of government control and regulation means there is gharar regarding digital currencies.” – Source
Engaging in crypto trading may constitute gambling, which is haram.
Cryptocurrencies Facilitate Crime
Opponents point out cryptocurrencies have enabled criminal activities:
- Money laundering
- Ransomware attacks
- Purchase of illegal goods
Islam prohibits engaging in or facilitating haram activities. Some believe trading cryptocurrency may indirectly assist crime. Same argument is also valid for fiat currency
“Cryptocurrency has been utilized to fund terrorism, launder money, purchase illegal weapons and substances, and engage in various financial crimes.” – Source
Lack of Regulation and Oversight
The decentralized nature of cryptocurrencies means no government or authority oversees them. This creates concerns:
- Vulnerable to pump and dump schemes
- Price manipulation
- Fraudulent ICOs/tokens
Critics argue this lack of regulation makes cryptocurrency trading risky and unethical.
Given these concerns, some Islamic experts declare cryptocurrencies and crypto trading prohibited under Sharia law. More analysis from scholars is needed.
Perspectives from Islamic Scholars and Institutions
Islamic scholars and institutions have weighed in on the permissibility of cryptocurrencies with varying conclusions:
Views of Prominent Scholars
- Sheikh Haitham al-Haddad (UK): Permitted if used for halal purposes, not pure speculation (source)
- Mufti Faraz Adam (UK): More study needed, avoid high risk speculation (source)
- Sheikh Assim Alhakeem (Saudi): Trading is halal, mining may not be (source)
Fatwas and Declarations
- OIC Fiqh Academy: Permissible based on financial need, not speculation (source)
- Turkey’s Diyanet: Bitcoin trading forbidden due to harm to individuals and society (source)
- Indonesia’s MUI: Trading haram due to gambling, fraud, harm potential (source)
Opinions vary based on factors like type of crypto activity and intent behind trading. As there is no concensus and if you are intend is not malicious , Crypto trading is Halal because everything is halal under proven haram.