Islam and Cryptocurrency – Halal or Haram?

The world was taken into the storm with the inception of cryptocurrencies in 2009 with Bitcoin. There are billions of payments that are in digital currencies. The top financial institutions are now adding them to their commercial infrastructure. Besides, the small and medium enterprises are ready to accept the payments in cryptocurrencies in return for their offerings.

While the masses took time to accept cryptocurrencies, some are still sceptical about investing in Bitcoin and other cryptocurrencies. A great example is Islamic finance, where the question raises whether cryptocurrencies are halal or not. The rationale lies in the speculative attributes of cryptocurrencies, which have raised concerns among Islamic scholars on whether to accept them within Islamic law. This article looks at the debate of whether cryptocurrency is Halal and how Islamic scholars view them in the light of Shariah (Islamic law). 

How does Islam see money? 

The Islamic principles are based on Shariah (Islamic law), which makes the notion of money entirely distinguished from mainstream economics. According to Islamic law, money or wealth refers to the property owned by vicegerents of Allah. In contrast to the capitalist society, it discourages egoism, making money function socially in Islam. Therefore, the investment made must accomplish socio-economic justice and the welfare of society. 

How is a tradable item legitimate in Shariah? 

There are different principles associated with it, with various schools of thought. However, there is a consensus with the three of the following principles:

  • The traded item must have some monetary value associated with it, referred to as ‘Thamaniyyah’ in Arabic. The financial value must possess an independent price added with acceptance and stability. Moreover, the monetary value in any reference point must have a complete transaction mechanism. 
  • The tradable item must have some legal value associated with it, known as ‘Taqawwum’ in Arabic. It denotes  a valuable substance and hence, is deemed  halal in Islamic Shariah. 
  • Lastly, the item must tag itself as the property. This refers to  ‘Maal’ in the Arabic language. Hence, the property denotes a desirable notion. The development of the asset is for human welfare, which can be stored and retrieved for making transactions over time.


  You can also read: Islamic Finance vs. Conventional Finance 

Why is accepting Cryptocurrencies a problem for Muslims?

The speculative nature of cryptocurrencies has caused debates, among Islamic scholars on ‘Is cryptocurrency Halal or not. The crypto firms are now swaying debate by launching instruments based on physical assets, validated by Islamic advisors. Despite the world’s transition towards cryptocurrencies, most Muslims are highly sceptical of the blockchain network. 

A huge reason is that the Muslim ummah relies heavily on referring to every dubious matter on the Islamic scholars for providing a ruling or Fatwa based on Shariah. In terms of cryptocurrencies, there is a drift in the opinions of scholars. Some say that they are Halal, which means permissible. On the contrary, others consider it Haram or impermissible. Even some scholars are neutral and feel that they need more time to think about the nature of cryptocurrencies to declare their decisions. It is causing a problem for Muslims to decide whether they should invest in cryptocurrencies or not. 

Is Cryptocurrency Halal? – Opinions of Islamic Scholars on the Legitimacy of Cryptocurrencies

As per Sheikh Shawki Allam, the Grand Mufti of Egypt, the use of cryptocurrencies poses the risk of fraudulence, pertaining to the lack of understanding, that can lead to dishonesty. According to the Mufti, the risks occur due to centralized authority regulating them. A renowned Islamic jurist and famous British personality, Shaykh Haitham Al-Haddad, declares Bitcoin and other cryptocurrencies Haram in Islam since virtual money has no tangible value. The Islamic jurist believes that the absence of central authority makes it unreliable. Although Shaykh Haitham states that the current form of cryptocurrency is not permissible as per Shariah law, he is very open to the possibility of the halal cryptocurrency, which is gold-backed for investment. 

However, according to Mufti Faraz Adam, a renowned Islamic scholar, cryptocurrencies qualify as digital assets. He believes that they have a value attached to them. Thus, in Shariah terms, it falls under ‘Maal’, referring to the stored item and ‘Taqawwum’, having legal value. While investing is not desirable, it is considered permissible (Halal) according to the verdict of Maulana Jamal Ahmed & Mufti Faraz Adam. 

Moreover, Mufti Abdul Qadir, an expert in Islamic finance and economics, states that cryptocurrencies serve as the supporting instrument for making progress in Islamic finance. Therefore, these are considered halal, due to the Islamic principle of anything widely accepted in society as a payment method, to qualify as permissible in Shariah law. Further, Mufti Muhammad Abu Bakr, a Mufti at Silk Bank Limited, states that if the country deems the currency legal as a payment method it automatically becomes legal in that region. For instance, if Germany accepts Bitcoin as the payment method, Muslims can buy and sell cryptocurrencies in that region. 

Related Content: Why should I invest in Islamic Cryptocurrency? 

What are the conditions in which cryptocurrencies are considered Halal?

The Islamic scholars are divided over the permissibility of cryptocurrencies, but there is a widespread consensus of the conditions deeming cryptocurrencies as Halal. These are as follows: 

  • The government must back the cryptocurrencies. Therefore, the coin value must depend on the economy’s stability. Moreover, physical assets such as gold, silver, etc. must back the value of cryptocurrency.
  • The central authority must track the financial transaction. Shariah is obligated to control unlawful activities such as gambling, drug trafficking, and money laundering.
  • Shariah law stresses there must be removal or mitigation of the speculative nature of the cryptocurrencies. Shariah law stresses to prevent the losses of the people. In short, there must be control over the volatility of cryptocurrencies and a central authority must control or monitor them. 

Shariah-compliant solution – Caizcoin

To combat the complications of the traditional cryptocurrenciesa new cryptocurrency is being  launched a Shariah-compliant Caizcoin. The word Caiz derives from the Arabic word, ‘Jaiz’, which means legal or permissible. It is the first-ever coin that  Integrates Islamic principles into the crypto market. It aims to combine the Islamic principles based on ethical finance and community well-being with advanced blockchain technology. 

 Frequently Asked Questions


The Islamic Shariah law discourages the notion of debt in general. Therefore, interest payments are deemed as usury and exploitation of the debtor. It makes it prohibited (Haram). Moreover, it does not permit to invest in all the commercial bonds and debt securities that work on interest revenue.

As per the Shariah law, investing in gold is deemeds  as the safest, and most traditional means of investment. The gold appreciates, is easy to obtain and does not breach any principle of Shariah law.

Caizcoin is a cryptocurrency launched in 2020, developed over the past three years back to enable secure and cost-efficient financial transactions complying with the Islamic Shariah law. Another element focused on is charitable works, which is significant in Islam. 

Caizcoin is the product of Caizcoin Holding AG, which is a capital-backed firm. The company offer investment security to people participating in the network.

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