Cryptocurrency: Halal or Haram? Navigating Islamic Finance

Syed Bukhari

Updated on:

Is Cryptocurrency Halal?

Is Crypto Halal? What Muslim Investors Want to Know

With interest in crypto booming, many Muslim investors are asking: Is it halal or haram? Fair question, but there’s no simple answer. Scholars don’t agree yet. Different fatwas reach different conclusions.

The core issue is whether cryptos themselves have inherent value according to Islamic principles. That’s still up for debate, so consensus remains elusive.

Still, lots of Muslims worldwide are using crypto. A 2018 paper calling bitcoin halal may have boosted prices. A London mosque even took crypto donations.

The debate goes on. For now, there’s no uniform Islamic view on crypto’s permissibility. Scholars are divided, so Muslims must weigh the arguments and make their own judgments. The key principles are avoiding riba (interest), maysir (gambling), and gharar (excessive risk).

Is cryptocurrency Halal?

Crypto remains a gray area – hence the lively debate. As Dr. Humayon says, investing in crypto isn’t inherently ethical or unethical now.

But some key issues persist that may shape crypto’s future:

  • Regulatory uncertainty
  • Price volatility
  • Energy consumption concerns
  • Limited adoption for transactions
  • Associations with criminal activity

So the jury is still out. The trajectory of regulation, volatility, adoption, and illicit use will likely impact future rulings on the permissibility of crypto in Islam. More discussion needed.

Is Cryptocurrency Halal?

Navigating Diverse Views on Cryptocurrency Permissibility

Islamic scholars have different views on cryptocurrency. Let’s look at the three main stances:

  • The Cautionary View

Some scholars see crypto as risky speculation, not real money. The Grand Mufti of Egypt worries crypto can hide illegal activities. He urges caution, like investing guru Haitham al-Haddad. They have fair concerns. But others say crypto holds value, like regular money.

  • The Middle Ground

Wise voices like Sheikh Ibn Baz take a balanced view. They see crypto as new technology, not yet a real currency but with potential. The decentralized nature, smart contracts, and blockchain security align with Islamic finance values. Ibn Baz allows crypto trades if done right.

  • The Digital Currency View

Forward-thinking scholars like Mufti Faraz Adam see crypto as digital assets for real utility and value, making them permissible wealth. Within crypto networks, these tokens can function as currency based on community acceptance. So they advocate embracing crypto while addressing risks.

Is Cryptocurrency Halal? -Regulatory 

Some argue Islamic jurists should wait for greater regulatory certainty before judging crypto as halal or haram.

As places like the US and UK develop crypto regulations, it could help determine permissibility.

Creating Sharia-compliant crypto investing guidelines could also assist Muslims interested in the market.

So the future regulatory landscape and whether Muslim communities can agree on investment principles may shape the crypto-halal debate going forward.

More patience may be prudent until there’s greater legal clarity and consensus on compliant participation in the crypto sphere.

Meeting Contractual Conditions – Mal The Islamic Point of View

For a contract to be valid in Islam, there must be exchange of something real with ownership value – known as Mal.

Supporters argue cryptos meet this:

  • Digital assets that can be possessed
  • Stored in wallets
  • Traded on exchanges

Since they are real, ownable assets that can be exchanged, some scholars say cryptos meet Sharia conditions for valid contractual exchange and consideration.

Con: The case against deeming cryptocurrency as halal

Many Islamic scholars don’t consider crypto halal for several reasons:

  • Easily used for illegal activities
  • Highly speculative, akin to gambling
  • Not real currency
  • No intrinsic value
  • Not controlled by central authority

Cryptos are decentralized by nature, so they can enable illegal transactions, money laundering, etc. Studies show a significant share of bitcoin use is illegal.

Prices are highly volatile due to speculation. Crypto is seen more as an investment asset, not a real currency.

Some countries have banned crypto, others impose regulations. Adoption is increasing but still limited for transactions.

With no government backing and value based on demand/supply not intrinsics, scholars argue cryptos lack validity as currency.

Those against crypto being halal highlight these concerns. More dialogue is required, but these are crucial considerations for Islamic investors weighing the arguments

Pro: The case for crypto as halal

Here is a condensed version covering the key points in favor of crypto being halal:

  • Cryptos can provide faster, cheaper transfers
  • They increase financial inclusion
  • Trading cryptos meets conditions of valid currency
  • Cryptos have underlying value from demand and use
  • They enable entrepreneurship and development

Supporters argue cryptos expand access to financial services globally. Transfers are fast, low-cost, borderless. This promotes financial inclusion.

They say crypto trading meets Sharia conditions for valid currency – mutual agreement, transferability, stability in value.

Though not government-backed, cryptos have value from demand, use cases, and perceived benefits. The technology has worth.

Cryptos enable new businesses and services. This promotes economic development, which aligns with Islamic finance goals.

Proponents make reasoned arguments for cryptos fulfilling the ideals of halal finance and business activity overall. The debate continues, but these are key points in favor.

Are cryptos real currencies?  

Supporters say the decentralization enhances crypto’s currency validity – no central control over supply or transparency.

And many already use cryptos for transactions, showing purchasing power.

But experts differ on seeing cryptos as true currencies currently.

Some say high volatility, transaction costs, and limited use in payments mean cryptos like Bitcoin are better viewed as assets for now.

Others argue cryptos are currencies as long as some use them as mediums of exchange. This meets Sharia standards.

So there are reasoned views on both sides of whether cryptos have attained real currency status yet. More adoption may shift perspectives.

Interest

Avoiding interest (riba) is vital in Islamic finance. Cryptocurrencies don’t charge interest rates. This is a key factor for some scholars deeming crypto permissible.

Unlike traditional lending, crypto transactions don’t involve paying or earning interest. You simply buy, sell or exchange the digital assets.

So the lack of interest-based finance associated with cryptos supports the case for considering them halal investments and mediums of exchange.

Gambling and illegal activity 

Some rebut speculation and illegal use concerns:

  • Stocks are also volatile, yet considered halal
  • Investor motive matters more than volatility
  • Using something halal for haram doesn’t make it inherently haram

They argue reasonable crypto investing to build wealth is permissible. Volatility alone doesn’t make it haram gambling.

And just because some use crypto illegally doesn’t prohibit ethical participation. The intent and actions of the individual investor matter most.

So these are counterpoints to be considered regarding speculation and illicit use arguments against crypto. Nuance is required in determining permissibility.

Crypto Staking – Halal or Haram?

What is staking?

Staking lets you earn interest on your crypto. You lock up coins in a wallet to help secure the network. In return, you get rewarded with more coins – like 5% yearly on Ethereum. By staking, you help the system validate transactions and achieve consensus. It’s a simple way to passively grow your portfolio. The more you stake, the higher your interest rewards.

Is staking halal or haram?

It can be, yes. There are different terms such as yield farming, liquidity mining, lending, staking, yield farming and they all have different technical meanings.

Halal Cryptocurrency List

This list contains the most comprehensive selection of cryptocurrencies that have been evaluated for compliance with Islamic principles. Each coin has been thoroughly assessed according to rigorous Shariah standards to identify if it is permissible or prohibited in Islam.

NameTickerHalal/ Haram Status
0xZRX0x: ZRX is Halal
1Inch1INCH1Inch: 1INCH is Haram
AaveAAVEAave: AAVE is Haram
AelfELFAelf: ELF is Halal
AergoAERGOAergo: AERGO is Halal
AgrelloDLTAgrello: DLT is Halal
AionAIONAion: AION is Halal
AkropolisAKROAkropolis: AKRO is Haram
Alchemy PayACHAlchemy Pay: ACH is Halal
AlgorandALGOAlgorand: ALGO is Halal
AllianceBlockALBTAllianceBlock: ALBT is yet TBD
Alpaca FinanceALPACAAlpaca Finance: ALPACA is Haram
Alpha Finance LabALPHAAlpha Finance Lab: ALPHA is Haram
AmpAMPAmp: AMP is undecided
Anchor ProtocolANCAnchor Protocol: ANC is Haram
AnkrANKRAnkr: ANKR is Haram
APY FinanceAPYAPY Finance: APY is Haram
AragonANTAragon: ANT is Halal
ArivaARVAriva: ARV is Halal
ARPA ChainARPAARPA Chain: ARPA is Halal
ArweaveARArweave: AR is Halal
Assemble ProtocolASMAssemble Protocol: ASM is Halal
ASTAASTAASTA: ASTA is Halal
AtlantATLAtlant: ATL is Halal
AudiusAUDIOAudius: AUDIO is undecided
AugerREPAuger: REP is Haram
AvalancheAVAXAvalanche: AVAX is Halal
Axie InfinityAXSAxie Infinity: AXS is Halal
Badger DAOBADGERBadger DAO: BADGER is Haram
BakeryTokenBAKEBakeryToken: BAKE is Haram
BalancerBALBalancer: BAL is Halal
BancorpBNTBancorp: BNT is Halal
Band ProtocolBANDBand Protocol: BAND is Halal
BankeraBNKBankera: BNK is Halal
BarnBridgeBONDBarnBridge: BOND is Haram
Basic Attention TokenBATBasic Attention Token: BAT is Halal
BeamBEAMBeam: BEAM is Halal
Bella ProtocolBELBella Protocol: BEL is Haram
Beta FinanceBETABeta Finance: BETA is Haram
BifrostBFCBifrost: BFC is Halal
Binance CoinBNBBinance Coin: BNB is Halal
Binance USDBUSDBinance USD: BUSD is Halal
BitcoinBTCBitcoin: BTC is Halal
Bitcoin BEP2BTCBBitcoin BEP2: BTCB is yet TBD
Bitcoin CashBCHBitcoin Cash: BCH is Halal
Bitcoin GoldBTGBitcoin Gold: BTG is Halal
Bitcoin SVBSVBitcoin SV: BSV is Halal
BitDAOBITBitDAO: BIT is Haram
BluzelleBLZBluzelle: BLZ is Halal
Bridge MutualBMIBridge Mutual: BMI is Haram

You may also like to read IS PANDA EXPRESS HALAL?

FAQ 👍

Can Muslims use crypto?

In Shariah, there is no valid reason to accept bitcoin or other cryptocurrencies as a currency. It is just an imaginary number, which is generated through a complex mathematical process. It is purchased for gambling or speculations, and used in illegal or unlawful transactions”.

Is Binance halal or haram?

Staking lets you earn interest on your crypto. You lock up coins in a wallet to help secure the network. In return, you get rewarded with more coins – like 5% yearly on Ethereum. By staking, you help the system validate transactions and achieve consensus. It’s a simple way to passively grow your portfolio. The more you stake, the higher your interest rewards.

Is Usdt trading halal or haram?

No, USDT coin is a stablecoin and always equivalent to USD $1.00. While staking USDT coin, you will get a fixed interest with a price pegged to USD and stable when you sell. Hence USDT coin staking is haram

Can Muslims buy crypto?

What do Islamic scholars say about crypto? Many Islamic scholars seem to agree that, as it stands, cryptocurrency is haram, and should be avoided by Muslims

Is Bitcoin haram in Islam?

Among the major cryptocurrencies, Bitcoin, Ethereum, and Dogecoin come under the halal category, while Shiba Inu (SHIB) token, Alpha, and PancakeSwap (CAKE) are labelled haram. To use CryptoHalal, a user must enter the name of the cryptocurrency.

Is crypto earning haram?

Crypto in general is halah to buy, sell or keep as an asset, but for binance (or any other exchange) only spot trading is halal, so margin trading, futures, staking, defi staking, earn services, loans, dual investments, borrowing ALL are Haram, and binance in particular even for normal staking gives you the rewards.