Answer
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
In this fatwa:
While the Fiqh Council of North America agrees with the position of those scholars and Fatwa committees that state Bitcoins are essentially halal, it also stresses that the Shariah commands Muslims to be wise with their wealth and not waste it.
Given the volatility and many uncertainties surrounding cryptocurrencies in general, the Fiqh Council strongly advises Muslims to be extremely cautious and do due diligence before deciding to invest in this market.
In responding to your question, the Fiqh Council of North America, states:
Bitcoins are a type of cryptocurrency
Bitcoins are a type of cryptocurrency, which are digital assets that exist online or in stored electronic medium. They are a recent invention whose purpose is to act as digital money for online transactions. A primary goal of these currencies is to avoid a centralized bank or government.
Cryptocurrencies are not backed by any tangible assets, and are typically produced by users who volunteer to do so through a complex process called mining.
All transactions are recorded in online ledgers known as blockchains, the transparent nature of which precludes any tampering or alteration. Transactions involving cryptocurrencies are typically anonymous and untraceable. There are many hundreds of cryptocurrencies; the first and most well-known is Bitcoin.
The base ruling in Islam is that all matters pertaining to human relations (muamalat) are permissible unless proven others. This is a well-known and agreed upon maxim in fiqh: al-asl fi-l-ashya al-ibah.
The Fiqh Council views that the objections some have raised against Bitcoins (such as the anonymity of the user; the uncertainty of its future value; the absence of an issuing authority or government regulation; and other objections) are not strong enough to warrant a verdict of impermissibility; hence, they remain upon the default, which is permissibility.
Conditions of trading in bitcoins
As well, the Fiqh Council views that Bitcoins shall be treated with the same Islamic rulings that apply to all fiat currencies. This includes but is not limited to the following:
- All the rulings of riba will apply to Bitcoins, as they do to fiat currencies.
- Exchanging Bitcoins for other cryptocurrencies, or for fiat currency, must be done as a spot-trade at the current rate of exchange.
- Purchasing and trading in Bitcoins for the sake of investment is permissible.
- Zakah will be due on Bitcoin investments if an Islamic year has passed and it is more than the nisab amount.
- Obtaining Bitcoins from another person in an impermissible, illegal or deceitful manner is sinful, as is the case with fiat money.
- It is permissible to mine Bitcoins and to be paid for one’s efforts in doing so, even if the payment is in the form of Bitcoins itself.
It should be noted that this fatwa is specific to Bitcoins; despite the fact that there are many hundreds of cryptocurrencies (such as Ethereum and Ripple), there are some minor differences that might potentially affect the rulings of other cryptocurrencies and hence would require a separate examination of those factors.
The ruling on bitcoins
In conclusion, while the Fiqh Council agrees with the position of those scholars and Fatwa committees that state Bitcoins are essentially halal, it also stresses that the Shariah commands Muslims to be wise with their wealth and not waste it. Given the volatility and many uncertainties surrounding cryptocurrencies in general, the Fiqh Council strongly advises Muslims to be extremely cautious and do due diligence before deciding to invest in this market.
Almighty Allah knows best.
Source: Fiqh Council of North America