How Halal Are Cryptocurrencies?

Blog Author
Funding Souq Editorial Team
Tech Writer
Apr 22, 2024
Funding Souq’s editorial team comprises experienced finance and investment professionals that are on a mission to fuel SME growth, create jobs, and drive the economy forward. They aim to share their extensive experience and industry know-how to empower entrepreneurs and investors alike.
Apr 22, 2024
Table of Contents


Cryptocurrencies have seen substantial growth since the emergence of Bitcoin back in 2009. Over time, and as the value of crypto assets continued to grow (particularly since the covid-19 pandemic) interest in them has also been skyrocketing in the Arab and Muslim world.

We’re seeing this particularly the emergence of regional crypto exchanges and platforms and their increase adoption in the region. With this large active adoption, questions on the validity of crypto as a Shariah-compliant investment vehicle or method for transacting are rising, and so is demand by the religious-minded investor to ensure that this asset is “halal.”

Is Crypto Halal? 


Islamic scholars agree on a set definition of what makes a financial instrument Shariah-compliant. For an instrument to be “halal” it must meet three crucial conditions:

·       1- The absence of interest or usury (or “Riba”) as it is explicitly forbidden in the religion.

·    2-   Usage of the asset as a speculative instrument (or “Gharar”) must be minimized as much as possible.

·    3-  One must not use the instrument in furtherance of banned or forbidden activities such as gambling or illicit activities such as money laundering.

Broadly speaking, cryptocurrencies are just that: a form of currency. In theory, they are as inert as regular fiat currencies, with the only exception being that they are decentralized. With that in mind, it would appear that the red line dividing “halal” crypto from “haram” crypto is the usage, whether by the investor or the type of coin itself. As such it is very hard to paint the entire industry with a single brush.

Read more about:   Halal Investment Guide 

Scholars Cannot Agree

It is precisely because of this difficulty and the variety of coins and use cases that Islamic scholars remain divided over whether crypto as an asset is Shariah-compliant.

The divisions have also been over the extent of jurisprudence rigor applied to the industry due to differing branches of jurisprudence or “Mathaheb.”


The Naysayers


The Directorate of Religious Affairs of Turkey has declared virtual currencies as un-Islamic, as it views their usage to be primarily as a speculative asset or for illegal financial activities, according to Syed Imadudin Asad’s extensive piece on scholarly debates surrounding crypto for

Some prominent Saudi scholars, including Assim Al Hakeem, have ruled that cryptocurrencies are forbidden for pretty much the same reasons listed above.

In Egypt, where the central bank has outright banned the use of crypto currencies, the Grand Mufti of Al Azhar – the country’s highest religious authority, has declared that minting money is the sole preview of states and governments.


The Proponents


Asad cites several Islamic scholars and clerics from across the globe who view cryptocurrencies as halal, broadly speaking. These include Indonesia’s Muhammad Abu Bakar, who views them simply as a medium of exchange, same as any fiat currency.

Meanwhile, Islamic scholars at the UK’s Masjid Ramadan have declared that Muslims can pay zakat – or the compulsory annual tithe of 2.5% -- through Bitcoin and Ethereum, the most widely-used cryptocurrencies globally.

Enter The Private Sector

A number of companies and platforms in the MENA region have been emerging with business models that hope to address some of these concerns.


Is Cyrptocurrency As safe as gold?


There are several startups that are now offering coins that are gold-backed in order to minimize the use of cryptocurrencies as a speculative asset, minimize volatility and wide swings in the crypto market, as well as living up to the general Islamic view that “real” economic assets trump purely financial ones.

These include the Dubai-based
OneGram, an Islamic financial services and technology company, which is building one of world's largest gold vaults in Dubai to create the world's first completely gold-backed digital currency.

There’s also the Dubai-based GoldPesa, which launched its gold-backed, bitcoin-inspired GPX token. Furthermore, US-based IBMC Financial Professionals Group teamed up with US Gold Currency In to introduce their gold-backed tokens back in 2020.

Read more about: Gold Vs. Asset Classes

Getting certified

Other companies, such as UAE-based Islamic financial consultancy firm Al Maali Consulting Group, have diversified into certifying crypto tokens as Shariah-compliant, including for OneGram.

As with Shariah-compliant bonds and sukuk, a number of token issuers have taken steps to ensure that their coins are Shariah compliant, including California-based
Stellar Lumens, who’s token received certification from the Shariyah Review Bureau.

Know more about: Sukuk Vs. Bond Halal Fixed Income

This trend of certifying crypto has grown to the point where there are now sites that aggregate and verify how Shariah-compliant a cryptocurrency is. Among these is Crypto Ummah, which to-date has screened 358 coins, verifying 247 of them as halal.





"The post is for educational purposes only and the Firm does not directly or indirectly provide these services. 
Funding Souq Limited (DIFC) is regulated by DFSA. SME Financing carries a potential default risk which may result in loss of all or part of 
your investment, incur costs or delays in receiving payments.Funding Souq operates Islamic Window, pursuant to which it's Shariah Supervisory Board (SSB) has reviewed the Shariah Compliant structure, to which this marketing material relates. SSB Members are from Safwa Shariah Advisory Pvt. Ltd., whose details are available on Funding Souq website."





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