No Comments
Bitcoin has hammered new all-time highs, and with retail traders scrambling to invest, the Islamic community are asking questions such as: Is investing in crypto haram? Is trading haram in Islam? Is crypto trading haram or halal? Crypto is halal or haram? Find out the correct answers and guidance in 99Bitcoin’s Halal crypto deep-dive.
In the realm of finance and trading, the concepts of halal (permissible) and haram (forbidden) are pivotal, guiding Muslims in their economic activities to ensure they align with Sharia law, and as Islamic law states, “Everything is halal unless it is said impermissible.”
Conversely, speculation and usury are prohibited under Islamic law — something many would argue is foundational in crypto. Does that mean it is better to give your money to banks so they can loan 10x that amount with ‘riba’ (aka ‘interest’ in Islam)?
No. But that doesn’t necessarily mean that Bitcoin or other cryptocurrencies are halal, either. So, let’s dive into this debate: Crypto is halal or haram?
Unpacking the Complex Question: Crypto is Halal or Haram?
(BTCUSDT)
Many people perceive cryptocurrencies as digital currencies and long-term investment opportunities, drawn to the innovative technology and practical applications behind specific crypto projects.
By this definition, investing in cryptocurrencies such as Bitcoin and Ethereum aligns with halal principles, provided the underlying project adheres to halal standards.
However, some Muslim scholars disagree on Bitcoin’s being Halal – notably, Sheikh Shawki Allam, the Grand Mutfi of Egypt, said Bitcoin risks “fraudulence, lack of knowledge, and cheating.”
I really enjoyed today's Tafsir session. Sheikh Pantami was asked his take on crypto; whether it's halal or haram.
He then took us on a journey through history. https://t.co/DHNCwduSB3
— Bilal👨🏽💻⚡️ (@bilal_champion_) March 20, 2024
However, it’s important to note not all speculation is haram, yet, the exact advice is variable – there are many exceptions that are universally considered haram in crypto. For instance, Ethereum allows you to take loans through Aave or Yearn Finance – therefore these tokens are haram.
Furthermore, holding behavior is fine according to many Muslim scholars, however, higher frequency speculation such as day trading is by some a definition haram as well.
Ethereum and Altcoins: Is Trading Haram in Islam?
Various Muslim authorities have already given the halal verdict for Ethereum – and in this instance it came down to a simple decision that if an altcoin offers no usury/credit then it is halal.
But what other altcoins on the market are halal and which are haram?
Islamic Finance Guru has given their verdict on six popular tokens as part of broader research into the question ‘Is investing in crypto haram?’.
- SushiSwap: Haram because it is used as a platform for lending crypto
- Solana: Halal because it is a blockchain network
- Compound: Haram for lending
- FTX Token: Haram and bankrupt
- Uniswap: Halal as it is used for buying tokens; think a decentralized Coinbase
Stablecoins: Is Trading Haram in Islam?
(USDTUSD)
However, as the industry grows into a wide variety of digital assets, a critical question is whether increasingly prevalent stablecoins are Halal.
Under most examinations, Stablecoins are halal as long as they’re handled using Sharia principles and ethics, as they become classified as a monetary system.
However, Islamic Finance Guru highlighted the complexities, explaining that: “Although interest-bearing instruments back it, it cannot be said that USDT’s owner is the actual owner.”
Is Investing in Crypto Haram? What About Memecoins?
A research paper titled ‘CryptoHalal: An Intelligent Decision-System for Identifying Halal and Haram Cryptocurrencies’ weighed in on the question of whether meme coins are halal back in November 2022 on the tail-end of the 2021 bull run.
The study was conducted by Shahad Z. Al-Khalifa, a student of the College of Computer and Information Sciences at King Saud University.
Among the major meme coins, Dogecoin is considered halal by the paper, while the Shiba Inu (SHIB) token is haram.
However, with recent Solana launches largely underperforming or rug pulling, many would consider tokens such as Book of Memes haram due to their close similarity with gambling.
The Bottom Line: Is Crypto Trading Halal or Haram?
The principles of Sharia law include avoiding investments in businesses that deal with alcohol, gambling, pork, and usury, among others.
Crypto has thrown a wrench into this system, being something ‘un-boxable’ like a kangaroo in a coat closet – as such, evaluating whether investing in cryptocurrencies is halal hinges on the nature and use case of the specific crypto project – Islamic investors are advised to exercise caution on every investment.
Explore: Slerf Meme Coin Minting Millionaires Despite Developer Deleting LP and Airdrop Tokens
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
