Bitcoin and Cryptocurrency
Shariah status of Bitcoin as a currency or asset
Cryptocurrency remains a disputed matter. Some scholars permit it as a speculative commodity or digital asset, while others prohibit it due to extreme gharar (uncertainty), facilitation of unlawful activities, and the absence of government backing.
Full Ruling
The OIC Fiqh Academy reviewed cryptocurrencies in 2018 and concluded they do not satisfy the conditions of a recognised currency (naqdayn) or conventional money (naqd). Key concerns include: (1) extreme price volatility (gharar fahish); (2) anonymity enabling illicit use; (3) absence of underlying tangible asset or government guarantee. However, a minority of members considered it permissible as a commodity or digital token where local law recognises it, subject to avoidance of speculation.
Rationale & Reasoning
Islamic finance requires transactions to involve real economic value. Currencies or assets with extreme, uncontrollable volatility introduce gharar (uncertainty) beyond permissible limits. The analogy to gold and silver (thaman haqiqi) is disputed since crypto lacks intrinsic value in the traditional sense.
Rule Basis (Daleel)
- 01Prohibition of gharar fahish (excessive uncertainty)
- 02Requirements for sound currency (naqdayn) or thaman
- 03Principle of 'urf (custom) for currency recognition
Dissenting / Minority View
Dr. Mufti Muhammad Abu Bakar (Blossom Finance) and several Malaysian scholars argue Bitcoin is permissible as a customary currency ('urf) where it is widely accepted, citing the principle that whatever society widely recognises as money acquires the status of currency.
↻How This Ruling Changed
Evolving consensus toward 'disputed' as several jurisdictions (Malaysia, UAE) established regulatory frameworks for digital assets, reducing the gharar argument.
Citations & Sources
OIC Fiqh Academy – Cryptocurrency Position Statement 2018
OIC International Islamic Fiqh Academy · 2018
Ref: 219/23/5