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14 July 2020

Could Crypto Be Compliant With Sharia Law? Experts Answer

Could Crypto Be Compliant With Sharia Law? Experts Answer

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Could Crypto Be Compliant With Sharia Law?

The rise in popularity of Bitcoin (BTC) and other cryptocurrencies has led to the discussion among Islamic scholars about digital currency’s compliance with Islamic canonical law. .

After 10 years of existence, the question of whether or not Bitcoin can in fact be compliant with Sharia law continues to be debated in the industry.

To see where we’re at with the debate today, we asked a variety of experts in Sharia law and finance to revisit the question.

There are mixed views among Muslims and Islamic scholars, with some rejecting the idea on the grounds of garar (uncertainty) or gash (misappropriation).

However, in reality, the existing phenomena of cryptocurrencies may not be treated as halal unconditionally due to some of their technical issues, operational mechanisms and legal statuses, which are not compliant with Sharia principles and ethical concerns.

Therefore, to enjoy with a halal cryptocurrency, one shall be designed within the Maqasid al-Shari’ah (divine objectives) and that is: a standard Sharia-compliant regulatory standard, Sharia guidelines and policies, a Sharia supervisory body to oversee every activity within the Maqasid al-Shari’ah, avoiding any element of garar in any aspect of the establishment or operation, establishment of the receiver (company) by maintaining standard account, the operation shall be an asset-backing one with valuable existence, instruments and principles in facilitating the operation shall be justified by the Sharia (al-‘Aqd, al-Ujrah, al-Ju’alah, al-Wakalah, al-Wadiyah, al-Amanah, al-Hewalah, al-Zakat, al-Waqf and al-Tabarru’at) and social responsibility by Zakat (alms), Waqf (endowment) and Tabarru’at (charity) over the income. .

For further reference, there is my recent book, “Halal Cryptocurrency Management,” which provides several solutions for a halal cryptocurrency with industrial reality, and my forthcoming book on Islamic fintech, “Realization and Industrial Solutions,” which is to be published by Palgrave MacMillan & Springer, Switzerland in 2020.

The growing phenomena of cryptocurrency, and in no exception of its halal alternative, may be promising with significant results and the future of a halal cryptocurrency may thus be anticipated to be positioned as at least a complementary currency in maximizing the opportunity as a most convenient currency for all besides enjoying smart investment opportunity and creating sustainable entrepreneuring goals within Maqasid al-Shari’ah.

Second, the Sharia compliance of a crypto asset depends on various factors: for example, the nature of the crypto asset itself, its issuance and distribution mechanisms, underlying projects or assets, its usage, etc.

After doing research for a few years, I have created a comprehensive framework and criteria to check whether a crypto asset is Sharia compliant or not.

Hence, each crypto asset merits a separate Islamic legal treatment and Sharia ruling.

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