Finance - Halal Guidance

Photo Courtesy: Stock Catalog We looked at what the most trusted sources and Islamic scholars had to say about cryptocurrency. Furthermore, we also included sources that are against cryptocurrency (claiming that it is not halal) to help you make the most educated decision. Some Islamic scholars view cryptocurrency as halal because they view it as a store of value or commodity. While other Islamic scholars deem it as non-halal (haram) because they don't see it as a currency, its volatility in value, and lack of government regulation. Table of Contents:1. What Is Cryptocurrency2. What Do Trusted Islamic Sources Have to Say About Cryptocurrencies Being Halal or Not3. Islamic Sharia Analyzed Cryptocurrencies4. Fun Fact: There is an Islamic Based Cryptocurrency What Is Cryptocurrency? Cryptocurrency is a digital currency that is not banked by any bank, and is secured by cryptography. This makes it almost impossible to counterfit. Cryptocurrencies are decentralized networks that are based on blockchain technology (source). There are many cryptocurrencies that we're sure you've heard of such as Bitcoin, Ethereum, Dogecoin and more. They all have a unique purpose and alt coins such as Basic Attention Token (BAT) and Ripple (XRP) are based off unique projects. Many experts believe that it will disrupt many industries (in a good way) including finance, law, banking, and many others. While this technology has great potential to change the way we do things in the future, cryptocurrencies face a fair share of criticism. People blame it for being responsible for facilitating illegal activities (such as the purchase of THC infused weed and other haram substances), volatility in price etc. However for our sakes, we wanted to know whether using cryptocurrencies is classified as halal or not. What Do Trusted Islamic Sources Have to Say About Cryptocurrencies Being Halal or Not 1- Shaikh & Dr. Abu Ammar Yasir Qadhi On Cryptocurrency To fully understand this topic, the first source we wanted to share was from (Shaikh & Dr. Abu Ammar Yasir Qadhi. He is a Pakistani-American preacher and imam. He has a Bachelor's degree in hadith and islamic studies from Islamic university of Madinah, a masters in Islamic Creed, and a PHd in Islamic studies. Shaikh and Dr. Abu Ammar Yasir Qadhi released a Fatwa that deemed cryptocurrency as halal (but not all types of cryptocurrencies). They did so by reviewing fatawas released around the world (which also had opposing views) and made their decision accordingly. During his Q&A, one of the criticisms they reviewed before making their final decision in their fatwa (a ruling on a point of Islamic law given by a recognized authority) is that, there is no value to crypocurrency. The Fiqh committee's response to that was that value is relative. He gives great examples of this. But a quick similar example would be baseball cards. Rare baseball cards are collectible items that can be sold for hundred of thousands of dollars. None of us here at Halal Guidance care about baseball so to us, it's just another random card that has no value. Many baseball fans would disagree and pay a lot of money for a rare baseball card. People value different things and therefore things that are not valuable to us may be valuable to someone else. Him and his council did not find a reason to prohibit cryptocurrency. Their fundamental reasoning came from the simple principle that something is deemed halal unless proven haram by sharia (similar to what you hear in the movies, "innocent till proven guilty"). Shaikh & Dr. Abu Ammar Yasir Qadhi States That Holding Cryptocurrency & Delaying Selling is Not Permissible During his speech, he claimed that using cryptocurrency is halal as long as it is being used for mining and immediate transactions. Holding Cryptocurrency for an unknown value in the future was ruled as haram. This is also applicable to fiat currency. An important part to mention is that he was referencing the main cryptocurrencies such as Bitcoin, Ethereum, Litecoin, etc. Not every single cryptocurrency. This makes sense since some alt coin cryptocurrencies are used for haram projects such as gambling. https://www.youtube.com/watch?v=TXB34Bnj8D0 2- Shaikh Assim Bin Loqman Al Hakeem on Cryptocurrency Sheikh Assim Bin Loqman Alhakeem graduated from the Umm al-Qura University in Makkah, Saudi Arabia in 1998. At present Sheikh Assim is an Imam of a masjid in Jeddah, a role which he has held for the past 22 years, where the sheikh delivers the weekly Friday sermons and lectures on various Islamic Sciences (source). Sheikh Assim had a different view on Cyrpocurrency. He concluded, that in his opinion, Bitcoin (and cryptocurrencies in general) are haram for the following reasons. Lack of Physicality (Cyrpto is virtual)Lack of regulationHe compares cryptocurrency to a pyramid schemeToo ambiguous Commodity or currency? Because it is difficult to categorize it, he does not view it as an actual currency (generally speaking)Open gate to haram money (He referenced ransomware and money laundering)Non-Simultaneous transaction Here's his full explanation as to why he views Cryptocurrency as haram: https://www.youtube.com/watch?v=HFagu4Avf4M 3- IslamicFinanceGuru on Cryptocurrency IslamicFinance Guru is a hub for muslims to help them with their investments, personal finance, and entrepreneurial journeys (source). They classify Cryptocurrencies as a commodity and a store of value. They acknowledge that the muslim community (and scholars) has different opinions on it. They did not give any Fatwas but they did reference the Fatwas that they looked into to come to their conclusion here. IslamicFinanceGuru concluded, based on their research which involved conversing with professionals, that cryptocurrencies are halal. They stated that the grey area in cryptocurrency is buying the new and random alternative coins. As previously stated, some alternative cryptocurrency coins offer tokens to help projects that are haram such as Gambling. As we always say on Halal Guidance, do your research and due diligence before making such decisions. https://www.youtube.com/watch?v=cYPhIxg5kJc 4- Mufti Mohammed Ataur Rahman Sajid When Mufti Mohammed Ataur Rahman Sajid was asked about bitcoin and cryptocurrencies, he had an opposing view and claimed it as not being halal. Here's a fatwa response to a question asked about cryptocurrencies: Bitcoin or any other digital currencies are just imaginary currencies. They does not exhibit the fundamental qualities and conditions of real currencies, at all. And these days the trade adopted with such currencies over the internet and web applications, does not really involve any mabie‘ (actual buying and selling), neither does it fulfill the basic Shar‘ai conditions for the provision of bay‘. Instead, in reality, it is a form of interest and gambling which is based on an ambiguous transaction and fraud. Therefore, the businesses running in form of buying and selling of bitcoins or any digital currencies on the internet are not Halal (i.e. impermissible) in light of the Islamic Shari‘ah and it is also impermissible to invest money in them.(Extracted from: Darul-Ifta Darululoom Deoband, Fatwa#: 155068 and 155275, October 12th 2017 & Jamia Uloom Islamiyah Binnori Town Karachi, Rajab al-Murajjab, 1438 Hijri) (source) Islamic Sharia Analyzed Cryptocurrencies Here's a list of cryptocurrencies that have been analyzed by shariya (source): 1Bitcoin28UNUS SED LEO2Ethereum29Dai3Tether30Dash4XRP31Cosmos5Litecoin32Celsius6Bitcoin Cash33Dogecoin7Cardano34Zcash8Polkadot35Binance USD9Chainlink36IOTA10Binance Coin37Revain11Stellar38Huobi Token12USD Coin39Filecoin13Wrapped Bitcoin40yearn.finance14Bitcoin SV41Ethereum Classic15Monero42FTX Token16EOS43Solana17TRON44Compound18NEM45Zilliqa19Tezos46Decred20Theta47Waves21Neo48Elrond22VeChain49Kusama23Crypto.com Coin50SushiSwap24Uniswap51Hedera Hashgraph25Aave52Horizen26Synthetix53Verge27Maker Fun Fact: There is an Islamic Based Cryptocurrency There is an Islamic cryptocurrency called, Caizcoin. It is "the first liberal muslim decentralized blockchain". The purpose of it is to transfer money between people around the world with a KYC (know Your Customer Principle) which is in compliance with the Islamic Finance rules. Check out their whitepaper in case you were curious. We don't mean to add this part to confuse you, the reason why we're including this fun fact is to show you that muslims are divided in the topic of cryptocurrency. Final Thoughts It seems like there are many different opinions and points being made on both sides. What we understood as the troubling points about cryptocurrencies were there ambiguity, fluctuations in value, lack of practical real world applications. On the other hand, some people in the muslim community praise crypto as being a new innovative way to transact and support new revolutionary projects. One thing is clear is that, based on our research, cryptocurrencies ought to be transacted immediately and holding cryptocurrencies for an unknown future value makes it haram. As we always say on Halal Guidance, please use the information and the research you have done to make your own decision.