Educational content only. We analyze Cryptocurrency through the lens of modern Islamic Finance rulings, specifically addressing Maliyah (Monetary Value) and Maysir (Speculation).
This is not financial, legal, or religious advice. Please consult a qualified scholar for your specific situation. We do not issue fatwas.
Cryptocurrency remains one of the most debated topics in Islamic Finance. Is Bitcoin "digital gold" or "haram gambling"? The answer typically depends on how you use it and the specific token in question.
Scholarly consensus overview
1. Is it 'Mal' (Wealth)?
For a trade to be valid in Shariah, the item exchanged must be Mal (Wealth)—something with intrinsic or customary value.
Early fatwas (circa 2017) were cautious, often labeling crypto as "virtual numbers" with no value. However, as adoption grew, major scholarly bodies (including advisors to Islamic banks) began to recognize established coins like Bitcoin as "Customary Money" (Thaman Istilahi) or digital assets.
If a token has utility (e.g. pays for gas fees, grants voting rights) or is accepted as payment, it meets the criteria of Mal.
What is the "Mal" (Wealth)?
For a trade to be Halal, the item must have intrinsic value (Mutaqawwam). What are you buying?
Digital Currency
Accepted by many scholars as "Customary Money" (Thaman Istilahi). It functions as a store of value and medium of exchange. Verdict: Generally Permissible (subject to screening).
2. Investing vs Gambling (Maysir)
The biggest concern scholars raise is Maysir (Gambling).
Buying an asset hoping its value increases is investment. Buying a token with no utility, purely hoping a hype cycle will pump the price so you can sell to a "greater fool", crosses the line into gambling.
Scholars advise avoiding "Meme Coins" (e.g. coins named after dogs with no roadmap) as their primary function is speculative gambling.
Investment vs Gambling (Maysir)
Excessive uncertainty (Gharar) and reliance on luck can turn a trade into gambling.
Investing
- Based on project fundamentals / whitepaper.
- Long-term hold (HODL).
- Asset has real utility.
Gambling (Maysir)
- Based on hype / tweets ("To the Moon").
- Leverage trading (Futures/Options) - Strictly Haram.
- Dependent on luck rather than analysis.
3. Futures & Leverage
While buying "Spot" (holding the actual coin) is generally permissible, trading Futures or Margin is almost universally declared Haram.
- Riba: Margin trading involves borrowing money with interest to leverage your position.
- Gharar: Futures contracts are often settled in cash without ownership of the underlying asset, violating the rule of Qabd (Possession).
Your Strategy Check
The same asset can be Halal to buy (Spot) but Haram to trade (Leverage).
Spot Holding
Buying the actual coin to own. Permissible.
Futures/Margin
Betting on price price without owning. Borrowing with interest. Haram.
Staking
Proof of Stake (rewards) vs Lending (interest). Requires specific screening.
4. UK Tax & Regulation
In the UK, HMRC treats crypto assets as property for tax purposes. This supports the Islamic view of them being "Mal".
You must pay Capital Gains Tax on profits. Failing to do so is a form of deception/fraud, which is sin. Unlike gambling winnings (which are tax-free in the UK), crypto profits are taxable, reinforcing that the law views it as "Trading", not "Gambling".
Where scholars usually draw the line
The Screened Projects Rule.
- • Project Legality: The coin must not be tied to a haram industry (e.g. a token specifically for a gambling casino or interest-based lending protocol).
- • Staking: "Staking" is a broad term. Proof-of-Stake rewards (valid work) are often Halal. "Lending" your coins to earn interest is Haram. You must verify the mechanism.
Summary
- Spot Trading: Generally Permissible for established coins (Bitcoin, Ethereum).
- Derivatives: Futures, Options, and Margin trading are Haram.
- Screening: You must check the underlying project of each token. Don't buy blindly.
Transparency
How we wrote this
We synthesized rulings from major bodies like the Shariah Review Bureau and individual scholars specializing in Fintech.
- AAOIFI Standards on Digital Assets (Draft)
- HMRC Guidelines on Cryptoassets (UK)
- Scholarly research on 'Thaman Istilahi' (Customary Money).