The Muslim Crypto Community worldwide: halal or haram — a never-ending debate

SALAMANTEX
5 min readApr 10, 2023

Ever since the launch of Bitcoin in 2009[1], there is confusion whether crypto should be considered halal or haram — in line with the Islamic faith or deemed harmful. The debate is complex and multifaceted. Across the globe, notably in Malysia, Indonesia, Thailand, Bahrain, Egypt, Turkey, UK, and North America[2], Islamic scholars are interpreting the ancient writings of the Quran to judge if cryptocurrencies in general or Bitcoin in specific are compliant with Islam. “There is no central authority in Islam who can make a final ruling on crypto.”[3] As of now, the debate is still ongoing and while many scholars deem crypto halal, there is still no official consensus and Muslim worshippers worldwide are stuck in a grey zone.

While we won’t be able to clearly answer the halal-haram question today, we want to give you a concise overview of which arguments the scholars are debating over.

For the sake of shortness, we will use the term ‘crypto’ as an umbrella term to cover all cryptocurrencies. However, we want to highlight that all cryptocurrencies have their own peculiarities and raison d’êtres, which is why they should not be blindly lumped together in the decision-making process.

HALAL

· Contractual certainty:

As per Shariah law, an asset must be mal, have the possibility to be possessed, stored, and exchanged.[4] All of these criteria are fulfilled by crypto: I can buy a certain amount of the crypto of my choice, keep it in the transactional platform, or better move it to my wallet for safe-keeping, and once I have decided to sell it, I can exchange or trade it. The mal requirement of contractual certainty is fulfilled.

· Interest:

The Quran forbids loaning money with an interest, called riba. “Since cryptocurrencies do not charge interest, some Islamic scholars consider them halal.”[5]

HARAM

· Crypto lives in the digital realm and has no physical equivalent:

In contrast to gold, silver, fiat money, and other real-world stores of value, cryptocurrencies live on the blockchain in the internet and have no physical form that one can touch and hold. “The intangible nature of crypto has lead most leaders in major Muslim communities to call crypto haram or harmful.”[5] However, there is a way to circumvent this unaccepted characteristic, that we will talk about in the second part of this article.

· No central authority oversees the crypto world:

While most countries and regions worldwide are currently working on setting up a future-oriented legal framework for the fast-paced crypto market, by design, there will never be a central authority. Blockchain technology is set up in a way in which a consensus mechanism rules over the transactions so that not one central entity or middleman can influence or alter the transaction chain. What makes blockchain-based cryptocurrencies so special, is exactly what some Muslim leaders are criticizing: there is no central authority in charge of ruling over the crypto world. This self-regulation looks like anarchy in their perspective.

UNDECIDED

· Crypto as a form of gambling:

The crypto market is characterized by extremely high volatility. The coins’ value is uncertain and can drop or shoot up within days or even hours, minutes or seconds. This sounds like a gamble to many Islamic scholars.4 However, let’s not forget that all financial assets have indeed a speculative element — just look at the stock market.

· The misuse of crypto for illegal activities:

It is true that the reputation of crypto has been tainted by years of misuse for money laundering and other illegal activity. Read all about it in one of our previous articles: The marathon between regulators and criminals in DeFi. Should crypto be considered haram because someone misuses it to do harm with it? Many scholars don’t think so.[6] Using something in a pursuit of harm does not make the original item or tool haram itself. Let’s look into another example to make this even more tangible: a scalpel, for example, can be used to murder someone but at the same time it is also used to save lives in surgeries. Therefore, it is usually deemed a positive tool, despite its rare misuse to hurt people.

· The question if crypto is a real currency and means of payment:

It remains questionable if crypto can be considered a real currency, in addition to its use for speculative investments. As per Shariah-law, a currency that is accepted by society as a daily means of payment, does not need to have any intrinsic value.[7] As the experience of SALAMANTEX and other players has shown in the past years, crypto can and is indeed being used as a currency. However, we still have a long way to go until mass adoption, when it has become conventional to pay for daily purchases with crypto.

We asked SALAMANTEX CEO René Pomassl for his opinion: “At SALAMANTEX, we believe that the current payment (r)evolution facilitated by blockchain technology will impact society as a whole and should therefore not exclude anyone due to their religion, ethnicity, gender or financial status. The crypto community does not discriminate but is truly inclusive.”

Let’s Talk Crypto at Seamless 2023 in Dubai — we will be waiting for you at stand C50 on May 23–24 🚀

[1] FAQ — Bitcoin

[2] Is Bitcoin Halal or Haram? Here’s What Islamic Scholars Are Saying (cryptonews.com)

[3] Crypto and Islam: Muslims debate whether bitcoin, dogecoin are allowed — The Washington Post

[4] Is Cryptocurrency Halal? Top Islamic Finance Experts Sound Off (sarwa.co)

[5] Crypto in The Middle East is On The Rise — Kinesis

[6] Is Cryptocurrency Halal? Top Islamic Finance Experts Sound Off (sarwa.co)

[7] Is Bitcoin Halal or Haram? Here’s What Islamic Scholars Are Saying (cryptonews.com)

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SALAMANTEX

User-friendly software solutions for payments with digital assets — from cryptocurrencies to loyalty points: www.salamantex.com