With the increasing adoption of digital currencies worldwide, a pressing question arises among many Muslim investors: Are profits from crypto halal, or do they contain Sharia suspicions? Many are concerned about reward earning programs such as staking for fear of falling into Sharia prohibitions like riba, gharar, and maysir. Riba means achieving guaranteed interest on money without effort, gharar refers to excessive uncertainty in the transaction, while maysir is gambling or earning money in a manner akin to betting. All these concepts are prohibited in Islam and should be avoided in any financial product.
To address these concerns, Binance has launched a new service called Sharia Earn aimed at providing an investment environment in cryptocurrencies that complies with Islamic law. The idea of this service is to provide halal ways to earn returns from digital currencies without violating Sharia regulations. To achieve this, the service underwent rigorous Sharia review by independent experts and received official Sharia accreditation from certified consultants (such as Amanie Advisors). In this article, we will explain in detail the framework of Sharia Earn, how Binance managed to make staking rewards halal, and what users in the Middle East and North Africa should know before participating in this service.
Understanding the staking mechanism and why it differs from riba interest
Staking in the blockchain world is the process of allocating and reserving a portion of your digital currencies within a specific network to help secure the network and verify the validity of transactions. In return, the network rewards you by granting you additional coins of the same type or another reward token. These rewards resemble the returns from participating in work and are not riba interest resulting from lending money.
To clarify, we present the fundamental difference between staking rewards and traditional riba interest:
- Riba interest: Comes from lending money to a person or another entity in exchange for a predetermined interest, without engaging in any real economic activity.
- Staking rewards: Come from real economic activity within the blockchain system, where you contribute to operating the network and confirming transactions in exchange for receiving a portion of the returns.
In other words, those engaged in staking perform actual work (such as validating transactions and securing the network) and earn rewards as a result of this effort, similar to what Bitcoin miners earn from block mining rewards. This model does not rely on loans or debt with interest, making it closer to the concept of profit for work rather than profit from money itself. From an Islamic finance perspective, this is a crucial point: the reward here arises from an active and clear contribution and is not based on betting or riba exploitation, opening the door to consider it a halal transaction if it is free from other prohibited elements.
Sharia supervision of the Binance Sharia Earn service
Binance has ensured strict Sharia governance for the Sharia Earn service to guarantee its continued compliance with religious rulings. The service is supervised by an accredited Sharia agent (a specialist consultant in financial transaction jurisprudence) who monitors and reviews operations periodically to ensure adherence to regulations. Among the key tasks assigned to this Sharia agent are:
- Filtering prohibited activities: Ensuring that currencies or rewards are not linked to any prohibited activities such as gambling, fraud, or fictitious investments.
- Legitimacy of the underlying project: Verifying that the field of work of the blockchain network on which the staking process occurs is permissible and does not involve prohibited activities (such as ensuring that the project is not a riba lending platform or a betting service).
- Monitoring the percentage of non-halal elements: Tracking any portion of the returns that may stem from mixed activities (partially non-compliant with Sharia) and ensuring that its percentage does not exceed the permissible limit (5%). If a specific project shows that its revenues exceed 5% from non-compliant sources, it is excluded from Sharia Earn offerings.
This Sharia review is not a one-time event but continues regularly as projects evolve to ensure that products under Sharia Earn remain within the scope of Sharia compliance at all times. When a new currency or product is included in this service, it is examined according to the same criteria before being offered to users. Additionally, Binance provides users with transparent Sharia reports and certificates issued by this Sharia agent, allowing everyone to understand the basis of the Sharia classification of the service and increasing trust and credibility.
How does Binance ensure Sharia compliance?
In addition to continuous monitoring, Binance relies on a set of clear criteria to ensure that the Sharia Earn service remains within the Sharia framework:
- Choose networks carefully: Binance does not provide all available staking options under this service; it selectively chooses only networks and projects that operate in permissible fields and do not engage in prohibited industries (such as excluding any project related to gambling or interest).
- Returns from actual project activity only: All rewards offered to investors in Sharia Earn stem from real operations (securing the network and processing transactions), and are not profits from lending users' money with interest.
- Filter out any non-compliant components: If a blockchain project has a small portion of its activity that may involve an illegitimate source of income, that percentage is precisely calculated, and the project is excluded if it exceeds the permissible limit (5%) as previously mentioned.
- Transparency for users: The platform allows users to view the terms of service and the Sharia review report themselves, enabling them to directly verify the product's compliance with Sharia before investing. This includes providing documents that show the fatwa or opinion of the Sharia consultant and the approved monitoring procedures.
Comparison between halal staking and other earning methods that may be prohibited
It is also useful to distinguish the halal staking offered by Sharia Earn from some other profit methods in the crypto space that may involve Sharia violations:
- Margin Trading: Based on borrowing with interest to increase trading power, which is an explicit riba loan, making it prohibited.
- Fixed interest lending: Some platforms allow lending your digital currencies for a fixed return, but this is essentially riba even if done in cryptocurrencies.
- Gambling or betting: Such as betting on the outcomes of events or participating in games of chance to gain returns, which falls under prohibited gambling.
- Halal staking: Relies on actual contribution to operating and securing the blockchain network, without any riba interest or prohibited transactions. As long as the working mechanism is clear and the project is permissible, its returns can be considered halal within the Sharia Earn framework.
What should you know before participating?
Although Binance Sharia Earn provides a Sharia-safe way to earn returns, users should be aware of certain matters before starting:
- Understand the project you are investing in: Even if the product is within Sharia Earn, you need to know the nature of the blockchain network and its core activity. Read about the currency or project to ensure you are comfortable with its nature and goals.
- Verify the Sharia review: Always refer to the Sharia agent's report for the currency or product you wish to subscribe to. This report indicates whether there is any percentage of mixed activities and what the Sharia ruling for it is.
- Ensure the digital asset's compliance: Not all “Earn” products on the Binance platform are automatically classified under Sharia Earn. Look for the “Shariah-compliant” label or the presence of the asset in the Sharia Earn section before assuming it is halal. For example, some currencies may be available for regular staking on Binance but are not approved under the Sharia service.
- Do not invest all your capital: Diversification in investment is important, even within Sharia-compliant projects. The cryptocurrency market is volatile, so invest a portion of your money while leaving part as an emergency reserve.
- Remember that profits are not guaranteed: Although the method of earning returns is halal within Sharia Earn, the actual value of the rewards depends on the network's performance and your level of participation. The returns here are not fixed interest but a variable percentage, and you may also face technical risks such as lock-up periods or the possibility of losing part of your capital if the currency's value declines.
Benefits of investing through Binance Sharia Earn for the Muslim investor
Choosing the Sharia Earn service not only gives you potential returns but also offers several important advantages for investors who are keen on Sharia compliance:
- Assurance from a Sharia perspective: Because you know that your money is not being used in activities that violate Islamic regulations, relieving you of the concern over the permissibility of profits.
- Supporting committed innovation: Your participation means funding ethically and legally compliant blockchain projects and technologies, encouraging more Sharia-compliant financial solutions.
- Full transparency: All information related to the profit-making mechanism is available to you, from the terms of service to Sharia review reports, allowing you to trace the source of each reward.
- Long-term investment: The staking mechanism encourages holding currencies for a longer period rather than engaging in rapid daily trading, which may protect you from sharp fluctuations and losses resulting from emotional decisions.
Summary
The Binance Sharia Earn service represents a pioneering step in providing safe and Sharia-compliant investment opportunities for investors in the crypto space. It allows Muslim investors to grow their digital assets securely and legitimately within a reliable and Sharia-monitored framework. The fundamental difference between this service and any form of riba interest is that the earned returns are the result of legitimate economic activity within the network, not interest on lending money. Therefore, if you are looking for a way to enter the world of cryptocurrencies without worrying about Sharia aspects, Sharia Earn may be a suitable option for you – provided that you educate yourself about its mechanisms and continuously follow the Sharia reports issued about it. With this clear approach and continuous commitment to Sharia standards, Binance has succeeded in making cryptocurrency staking genuinely halal, through a deliberate design that ensures rewards come from real participation in securing the network, not from interest or speculation. For more details about this service and how to subscribe, you can visit the Binance Sharia Earn page on the official Binance website.