Since Bitcoin (BTC) and other cryptocurrencies went mainstream, there has been a debate centering on whether or not it was allowed in the Islamic faith. Recently, a 90-year-old Saudi Salafic cleric laid down what could be the most definitive answer to this debate.
The Debate on Bitcoin’s Permissibility on Islam
Although the United Arab Emirates (UAE) has been instrumental in expanding the reach of cryptocurrencies and exchanges, there have been arguments among some Islamic scholars if these digital assets are indeed “halal” or “haram.” Many of us may have already encountered these two familiar words, especially the former, in various product packaging or other forms of goods but some may not have a full idea of what they really mean.
For the unfamiliar, halal means “permissible” while haram means “forbidden” under Islamic law. These form the guiding principles of the faithful to ensure that they are acting, consuming, or practicing other activities in accordance with the standards of morality.
Some Sharia experts used to argue that crypto is haram because many of them are not based on real commodities or have speculative values. Investing and trading them were also likened to high-stakes casino gambling. However, other Sharia law experts like Mufti Muhammad Abu Bakar, Manager of Shariah Operations at Minhaj Advisory in Dubai, firmly believe cryptocurrencies similar to Bitcoin are halal when they are used as a payment system or as “zakat” — a donation required from a Muslim based on their wealth or savings. They are permissible as well when they are based on Sharia-compliant projects.
Saudi Salafi Cleric Weighs In
To finally put the status of Bitcoin to rest, Saudi Salafic cleric Adbul Rahman Nasser Al-Barrack recently issued a “fatwa” or verdict on the official status of the digital asset based on the traditional Islamic faith. The 90-year-old cleric’s issuance started with an admission that Bitcoin may have been once considered unacceptable but he is now reversing that view.
A direct translation of what the Saudi Salafi cleric says, “…what makes it[Bitcoin] more likely to say that it is permissible – in my opinion – is that as long as this currency has a cover from the one who issued it, it is acceptable.”
“Because then they resemble checks issued with divided amounts on a balance in a known account,” it adds.
The fatwa also pushes for discussion of Bitcoin’s expanded adoption. However, he reminds his subjects that similar to paper money or fiat, the digital asset must not be utilized for usury and it should be required for zakat.