Cryptocurrency in Light of the Shari’ah

Abstract

There has been a lot of hype around the cryptocurrency space whether it is another get rich quick scheme or something that can bring meaningful change to how transactions are being made. In December 2017 the price hike of the dominant cryptocurrency Bitcoin (BTC) caught the attention of investors and the interest of the ordinary person. If one should search the internet whether cryptocurrency is permissible in the Shari’ah, conflicting answers appear. Some argue that it is good to have an alternative currency to the current fiat currency system in which the predominant role is played by banks, while cryptocurrency does not require any bank account, tax payment and auditing. Another argument is that it is not acceptable as it is not regulated and consists of too much ambiguity that thus attracts illegal activity. The crypto space is evolving at a rapid pace with governments, educational institutes and banks showing interest in this developing market. The findings of this study does not outright deem cryptocurrency impermissible, rather it identifies elements within trading cryptocurrencies that may render a trade impermissible. This position is adopted based on the benefits cryptocurrency has offer as well as the requirements of trade set by the Shari’ah. There are few literature published on this topic, most of the research is based on reports, studies, articles and research papers. The topic is important as it is a major breakthrough in technology and may present many opportunities to businesses and individuals. As a Muslim community we need to be at the forefront of developments and empower ourselves with what is beneficial. Furthermore, the place of this research, South Africa, has introduced their own cryptocurrency and thus putting a responsibility on the Muslim leader to provide clarity on this matter from an Islamic point of view.