Cryptocurrency and Islamic Finance: Debunking the Haram Myth
Cryptocurrency, a decentralized digital asset, has sparked debates within Islamic finance regarding its permissibility (halal) or prohibition (haram). Misconceptions often arise from equating crypto with gambling (maysir) or uncertainty (gharar), leading to rumors that it’s inherently haram. This article explores why these rumors persist, what Islamic scholars say, and provides evidence supporting crypto’s permissibility under Shariah.
Why the Haram Rumors Persist
Rumors labeling cryptocurrency as haram stem from its volatility, anonymity, and association with speculative trading. Critics argue it resembles gambling due to price fluctuations or lacks tangible backing, akin to riba (usury). Misinformation also spreads due to a lack of understanding of blockchain technology. Early skepticism from some scholars, unfamiliar with crypto’s mechanics, fueled these claims. Additionally, media reports of crypto scams and unregulated markets amplify distrust, overshadowing its potential as a legitimate financial tool.
Islamic Scholars’ Perspectives
Islamic scholars are divided but increasingly open to cryptocurrencies. Early fatwas, like those from Egypt’s Dar al-Ifta (2018), deemed Bitcoin haram, citing speculation and lack of state backing. However, progressive scholars argue that crypto aligns with Islamic principles when used correctly. Mufti Muhammad Abu-Bakar’s 2017 paper, “Shariah Analysis of Bitcoin,” concludes that Bitcoin is permissible as a medium of exchange, provided it avoids excessive speculation. The Shariah Advisory Council of Malaysia (2020) also declared crypto trading halal under certain conditions, emphasizing transparency and utility.
