Islamic Coin; Halal or Haram?
Muslim researchers and investors have been debating whether digital finance is regarded as halal and whether cryptocurrency and blockchain adhere to the principles of Islamic finance ever since the first coin appeared. Given the level of market trust in cryptocurrencies and the fact that more than 17,000 cryptocurrencies and tokens currently rely on it, finding a solution to this problem is crucial.
According to a report Mufti Muhammad Abu-Bakr, a former adviser at Blossom Finance, published in 2019, cryptocurrencies like Bitcoin should be regarded as halal and permitted by Shariah. The rationale behind Mufti Abu Bakr’s choice was that since all conventional (and legal) currencies have a speculative component, Islamic law should also permit cryptocurrencies, which are not regarded as money in the conventional sense.
Scientists from Bahrain’s Shariah Review Bureau declared in 2018 that cryptocurrency investments are permissible under Shariah and Halal law. They believed that coins are comparable to a particular class of property and do not have a speculative component.
Similar to that, Bitcoin has been universally approved by the Fiqh Council of North America. Additionally, cryptocurrency dealing and investment are legal, according to a report from the Malaysian Security Commission’s office of the Shariah Advisory Council. As a result, Sadaqah can also be paid with digital money.
Despite the fact that numerous Muslim scholars have examined and studied the market for digital currencies, they have not yet reached a consensus on whether it is halal or not. Therefore, in order to take into account the ages-old Shariah regulations governing finance and investment, I will delve a little deeply into the history of money from the perspective of Islamic finance.
A Brief Timeline
From an Islamic perspective, money has a long past that dates all the way back to the founding of the religion. Islam and Shariah law both hold that money should only be used for trade and not for speculation or abuse. This is one of the reasons that Islam firmly forbids the practice of riba (interest), which is viewed as turning a profit from money. Islamic views on money and commerce are founded on the ideas of societal justice and non-exploitation.
According to Shariah law, money must be reliable, stable, and effective in order to be used as a medium of trade. Since there was no mention of digital currencies when the Quran was written because technology was not as developed as it is now, some Muslims question whether Bitcoin is lawful and complies with Shariah law. This implied that scientific opinions and views could be used to determine whether cryptocurrencies were acceptable.
Muslims around the globe debate whether it is worthwhile to invest in cryptocurrencies, which brings up the question of whether they are halal from an Islamic perspective. Like many conventional currencies, cryptocurrency is founded on supply and demand, and the market determines the value of the individual coins.
Islamic Finance and Crypto
A free, open financial market was born with the advent of bitcoin. The fact that Muslims have started interacting with this market is not unexpected. Islamic finance regulations establish limits and regulations for financial operations. While the majority of scholars and imams have clearly interpreted that cryptocurrencies do not contravene any of the laws governing Islamic finance, cryptocurrency is still a significant topic of news and study for scholars and specialists in the field of Islamic finance.
The following are the major aspects of Islamic finance that should be taken into account when it comes to cryptocurrencies:
- Interest (riba), which is forbidden in Islam;
- Speculation (maysir) — speculative purchases are viewed as unacceptable because they resemble gambling;
- Distribution of profits and losses — in line with Islamic finance, the parties to the transaction must share the risks and rewards;
- No Excessive Risk (gharar): According to Islamic banking, uncertain or high-risk transactions must be avoided;
- The use of business and trade (albac’).
IslamicCoin, in contrast to other cryptocurrencies, aims to benefit the Muslim community in a useful way. IslamicCoin seeks to serve the Muslim community by establishing a decentralized endowment, whose value will increase as IslamicCoin’s popularity grows, rather than simply taking advantage of being halal. Their goal is to provide Islamic adherents with a financial and technological tool that enables autonomous financial interaction and fosters charitable giving.
Among the members of the Islamic Coin Shariah Council are some of the most illustrious Islamic scholars in the world. Prior to the project’s launch, Shariah Board members conducted a comprehensive analysis of the suggested system and gave a FATWA in accordance with the Islamic Finance International codes of Conduct and Compliance.
IslamicCoin CANNOT be randomly printed, which would reduce its worth. Its price is set by the market and is always equitable; it CANNOT be inflated through an increase in the central bank’s interest rate. Only those who spend time and money as network validators may mint (issue) IslamicCoin at a set, publicly announced rate. IslamicCoin is not run by banks, whose primary goal is to make money by charging interest, as is the case with fiduciary money. Riba is caused by interest charging, which is prohibited.
To learn more, visit Islamic Coin
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