Is Cryptocurrency Halal or Haram? A Shariah analysis

Muhammad Tahir
7 min readNov 15, 2021

Islamic Finance

The essential Sharia requirement for a means of payment for goods and services to be recognised as an acceptable tender of settlement is that it should be acceptable to a substantial number of counterparties in given demography or community.

This article attempts to explain the Shariah rulings on cryptocurrencies such as Bitcoin and should not be taken as a definitive ruling. Rather, it should be taken as a resource to help inform the decisions of muslims and explain the positions and issues around the cryptocurrencies as raised by Islamic scholars.
This article explains the rulings and issues on cryptocurrencies themselves and does not explain the investing options such as stacking, mining and yield farming etc.


The Sharia- laws that guide the way of life of Muslims. This encompasses all spheres of life; social, economic and political aspects of life. Therefore every action is informed by the Islamic guidance on it.

Cryptocurrency is a relatively new technology and has so far caused disagreement between scholars on its injunction.

What is Blockchain?

Blockchain is a technology. Like the internet, our phones and PC. It makes life easier and better for humans.

Blockchain is a ledger (a transaction record book) that is digital, immutable, and duplicated across several computers (nodes of the network).

Transactions on the blockchain are recorded in ways that can’t be altered, reversed or hacked.

Computers serve as nodes of the system, and the system has no central control/server. All transactions happen directly between pairs(P2P) with no intermediaries.

What are Cryptocurrencies?

Cryptocurrencies; a class of virtual currency(others in-game coins or credit, electronic or digital money or tokens issued by private companies.) Cryptocurrencies are digital or virtual currencies that are encrypted (secured) using cryptography. They are created and stored electronically.

Virtual currencies, as defined by the European Bank Authority, “is a digital representation of value that is neither issued by a central bank or a public authority nor necessarily attached to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically.”

In Shariah, the fundamental requirement for a counter value or consideration is Mal, loosely translated as property or wealth. Therefore, before discussing the status of cryptocurrencies, it is crucial to define the concept of Ma̅l in the Sharia.

Mal means anything that can be owed, valuable and is transferrable from one person to another. Mal is anything that has the following attributes:

  • It is lawful and permissible in the Shariah. Alcohol or pigs aren’t permissible and are not regarded as Mal.
  • It can be owed or possessed. Fishes in the ocean, birds in the air aren’t considered Mal as well.
  • It is beneficial.
  • It is valuable and treated as such by people and is compensated for if destroyed.

Are cryptocurrencies Mal?

Cryptocurrencies can be owned and possessed. It is worth something since people are ready to exchange money for it, and businesses also accept it as payment. As for value, it could be argued that they aren’t intrinsically valuable. However, the same can be said for our legal tenders (Dollars, Pound and Naira) but unanimously regarded as Mal.

Now that cryptocurrencies are established as Mal.

Is cryptocurrency an asset/commodity or a currency?

Money refers to everything which is widely accepted as a medium of exchange and a store of value.
It does not matter what the nature and form of that thing are.
Before anything is referred to as money, it must have the following features:

  • Serve as a medium of exchange
  • Measure of value
  • Generally accepted
  • Unit of account

Ibn Qayyim said that “money is not desired for itself, but rather it is created to facilitate the trade of goods. So then if money itself is treated as a good or commodity, this would lead to destruction”.

Commodities, on the other hand, are things with intrinsic value and can be utilised directly. They have different uses, quality and attributes. They can be sold and bought.

Cryptocurrencies have both attributes. They serve as a means of exchange and are also bought and sold with different uses and features.

It is still early ages for cryptocurrencies; hence they aren’t the best of currencies because:

  • High volatility (prone to crash and huge fluctuations in price),
  • online heists of millions,
  • not an effective means of payment.
  • However, as the industry matures, there would be a reduction in these and set them as better virtual currencies.

Why are Cryptocurrencies regarded Haram by some scholars?

Scholars that point out the impermissibility of cryptocurrency do so for the following reasons:

  • no cryptocurrency is a legal tender
  • the issuers are unknown
  • no central authorities or government are backing it
  • they are highly speculative and not stable
  • they are easily used for money and drug laundering, and illegal purposes

On the other hand, there are scholars that regard cryptocurrency as permissible.

There is a famous legal maxim explained by jurists: “الاباحة المعاملات في الاصل. “

This means that the original rule is permissibility in financial and business transactions.
In other words, everything is permissible unless we find it clearly contradictory to Shariah principles.

To address the issues raised by scholars that claim it is Haram:

Legal tender: are government-backed currencies. Money is what is has acceptability among the people in that jurisdiction. In principle, to qualify something as money, it is not necessary to have legal tender status. Bitcoin, for example, has become a currency as a result based on ‘Urf ‘aam (widespread custom) or general acceptance. El Salvador holds and approves Bitcoin as a legal tender, the first country to do so.

Lack of issuer and government backing and oversight: Cryptocurrencies are governed by rules that users accept mutually, baked into codes and cryptographic technologies that underline the currencies.
Depending on the currency, these rules can be changed and are open for anyone to critique and suggest revisions. Consensus has to be reached for change to be affected. (Etheruem’s move from Proof of Work (PoW) to Proof of Stake (PoS).

Speculative and high volatility of the currencies: These are external to the underlying technology and currencies themselves. The prices are subject to market forces, demand and supply. If this is a basis for impermissibility, then other currencies, USD, Euro, gold and silver, are all subject to such rulings. Stocks have high volatility with even pump and dump schemes similar to those in the crypto markets.

Used for illegal activities: This is also an external factor and doesn’t affect the legality of cryptocurrency or blockchain. Prophet Muhammad (peace be upon him) forbade the selling of grapes to a wine merchant since making wine is Haram (impermissible) but did not prohibit the production or trading of grapes for lawful purposes.
All fiat currencies are used for illegal activities too, money laundering, fraud, tax evasion etc.

Some merits of the blockchain and cryptocurrencies are:

  • All transactions are transparent. There is no hidden movement of currencies. All transactions made are available on the blockchain for everybody to see. This is very useful in accounting-forensics, and so on.
  • The blockchain isn’t hackable. The security of the blockchain is secured by every node(computer) on the network. Therefore there is no single point of failure, unlike centralised systems that can be hacked. See Bangladesh bank robbery.
  • Cryptocurrencies serve as a store of value. As seen before in history, governments and central banks destroy wealth through inflation. Examples are Weimar Germany in 1923, Greece in 1944, Hungary in 1946, Yugoslavia in 1994, Indonesia in 1999, and Zimbabwe in 2008. And more recently, Venezuela. Venezuelans have turned to bitcoin to store their money as inflation is estimated to run at 500%.
    Venezuelans have since traded other virtual currencies, such as selling in-game gold to other players and using it to pay for their basic amenities.


Roman and Byzantine gold, silver and copper coinage were common in pre-Islamic Arabia. These foreign coins remained in circulation during the 40 years of the Caliphs and the early 30 years of the Ummayad period. It was during the Hijra years 70s (CE 690s) onward that Islamic coinage came into circulation. For the best early part of Islamic civilisation, means of payment remained neutral to the system of Islamic moral guidance.

Fast forward to the present day, and we use almost any currency. Any money or currency in of itself is neither halal (permissible) nor Haram (impermissible). It is about the value which the money represents. If money is transacted lawfully, then it is halal. People’s values or rights represented by a real/virtual currency or coin should not be violated or undermined.

The essential Sharia requirement for a means of payment for goods and services to be recognised as an acceptable tender of settlement is that it should be acceptable to a substantial number of counterparties in a given demography or community.

Bitcoin and other cryptocurrencies don’t meet the strictest definition of money. Still, they eliminate two of the worst problems with modern fiat money: the creation of money through usurious debt (Riba) and fractional reserve banking.

Finally, here is a thread on the importance of financial dealings.

The third major branch of Islam is financial dealings, al-muʿāmalāt. Economic activity — buying, selling, working, earning, renting — is a very large part of our daily lives. Our economic activity, how we buy and sell, how we earn and how we spend, is subject to divine guidance.

- Furhan Zubairi (@FurhanZubairi) November 13, 2021

Allah knows best.

Thanks to Ramadan for reading the draft.


  1. Prof. Abdul Majeed Alaro (FIFP, MCIARB, CIAE), CRYPTOCURRENCY: An Islamic Law Perspective
  2. Mufti Muhammad Abu-Bakar, Shariah Analysis of Bitcoin, Cryptocurrency, and Blockchain
  3. Mufti Abdul Kadir Barkatulla, How Does Sharia View Crypto-Currencies?
  4. Fatwa: Is Bitcoin Halal or Haram?
  5. Scholars Who Say Cryptocurrency is Haram and Those who say its Halal
  6. Shariyah Review Bureau, The Shariah factor in Cryptocurrencies and Tokens
  7. Ibrahim Khan,Is bitcoin halal? What about other cryptocurrencies?
  8. Jake Frankenfield, Investopedia, Virtual Currency

Originally published at on November 15, 2021.



Muhammad Tahir

writing on personal finance, investing and other ideas. I love food