Unlike recognized money where cryptocurrency is only recognized by certain communities or networks. At the same time, questions are being raised about its status in Islamic investment. 

According to the Dawn newspaper’s Business and Finance report, communities or networks that recognize the cryptocurrency consider it a source of finance or exchange. 

Similarly, the legal status of any cryptocurrency is based on consensus among the participants of a particular network and no sovereign country or government can guarantee that its value is stable and fictitious. 

If one wants to get cryptocurrency, there are two ways, first, to buy it from a cryptocurrency exchange or to make it oneself. 


Types of Cryptocurrencies

Bitcoin, Bitcoin Cash, Ripple, Ethereum, Zee Cash, Light Coin, Monroe, and Dash are the most popular and widely used cryptocurrencies. 

However, no cryptocurrency has been declared a recognized currency, but proponents of cryptocurrencies believe it will replace the original currency in the future. 

International Scholars Perspectives 

Non-Muslim scholars, on the other hand, argue that cryptocurrencies are in line with Islamic financial requirements and may be beneficial for Islamic investment. 

However, due to the diverse perspectives on Islamic law, there is no agreement between Muslim scholars on the legality of cryptocurrency and many Muslims consider it un-Islamic. 

Virtual currencies have been declared un-Islamic by Turkey’s Directorate of Religious Affairs because their value is fictitious and they can be used for illegal activities such as money laundering and are not audited and monitored by the state. 

Top clerics in Egypt have banned cryptocurrencies, saying they are like gambling and could facilitate money laundering and illicit activities. 

He said that cryptocurrency was also a reason for weakening the state as the only right to issue “currency” was to the monetary institutions which were the most important part of the state. 

Asim al-Hakim, is a well-known cleric in Saudi Arabia, outlaws cryptocurrency in Islam because it is vague and facilitates money laundering and other activities. 

Similarly, the first of the other objections against cryptocurrency is its ambiguity, fictitiousness, aiding and abetting various criminal activities, and its non-issuance by the state. 

In Saudi Arabia and the United Arab Emirates, the central bank warned its citizens of the dangers of cryptocurrency but did not ban it. 

In South Africa, however, Islamic scholars have advocated cryptocurrency because, according to them, it is socially acceptable and commonly used. 

Similarly, Muhammad Abu Bakr, an Islamic scholar in Indonesia, has legalized bitcoin in Islam. 

His position is that Germany has recognized bitcoin as a legal currency, so it is an “Islamic currency” in Germany, as well as various individuals and merchants, have recognized bitcoin as a transaction in their transactions. While it can be considered as Islamic traditional money. 

Similarly, according to Islamic scholars at the Ramadan Mosque in the UK, Muslims can pay Zakat through bitcoin and etherium. 

Source: Dawn