As Bitcoin soars, Muslims question its place in Shariah finance
Over the past few years, the number of queries about cryptocurrency from Muslims has grown at a rapid pace. The pattern is always the same: excitement, followed by confusion, followed by a pressing question, is this even halal?
For many, the rise of Bitcoin and Ethereum feels like watching money being reinvented in real time. Prices climb, headlines scream, and communities debate whether this is opportunity or deception. Within Muslim circles, the urgency is sharper. People want reassurance before they put their savings into a system that might not align with their faith.
This article does not claim to be a fatwa. It is not a final ruling. Instead, it is an informed contribution to a conversation that is still unfolding. I have drawn on existing research, including the work of respected scholars, but I also want to add a perspective shaped by the realities Muslims face today, financial insecurity, technological change, and the desire for halal wealth-building.
What Is Cryptocurrency, Really?
At its core, cryptocurrency is not as mysterious as it first appears. Bitcoin, for instance, emerged after the 2008 financial crisis, born out of frustration with banks and governments that could print money at will. It is a digital currency that runs on blockchain technology, a public record where every transaction is logged, verified, and secured by thousands of computers. No one can fake it, no one can secretly alter it, and no one, neither banks nor governments, controls it.
For Muslims, the appeal is obvious. A system that resists inflation, avoids interest-based banks, and gives ownership directly to the individual sounds aligned with principles we already value. But that is only one side of the story. The volatility is brutal. Bitcoin can rise 50% in a month and then erase those gains in days. Ethereum promises smart contracts and decentralised apps, but its ecosystem is littered with scams and speculative projects.
So the question is not just whether cryptocurrency works as money, but whether it can be recognised as Māl in Islamic terms, something with inherent value that can be lawfully exchanged.
Is Crypto Considered Wealth (Māl) in Islam?
Islamic legal scholars define Māl as something that is desired, storable, and transferable. Gold fits this definition. Real estate fits it. Even fiat currency, which is just paper backed by government trust, has been accepted as Māl.
Where does crypto stand? Here the scholarly debate splits into three perspectives:
- Crypto is not Māl: It is intangible, speculative, and closer to gambling tokens.
- Crypto is a digital asset, not a currency: It has value within its network but is not yet a stable medium of exchange.
- Certain cryptos can be treated as currency: If widely adopted and stable enough, they could function like money.
In my view, position (2) captures the current reality best. Crypto is not worthless, it is clearly valued by millions and accepted by businesses, but it does not yet function as reliable currency. It is closer to an asset class, like digital property, than a day-to-day medium of exchange.
Why Muslims Are Drawn to Crypto
The motivations are not hard to understand:
- Hedge against inflation: In countries where currencies collapse, Bitcoin looks like salvation.
- Financial independence: Many Muslims are uneasy with interest-driven banking systems.
- Innovation: Smart contracts, DeFi, and blockchain applications hint at a financial system that could be restructured around fairness and transparency.
- Community stories: Muslims see friends and relatives doubling or tripling savings, and they do not want to miss out.
Yet it is exactly at times of euphoria that caution is required. Gold had its bubble in 2011, housing had its crash in 2008, and crypto has already gone through several boom-and-bust cycles. Shariah teaches us to avoid speculation that mimics gambling.
Halal and Haram in Practice
When Muslims ask if crypto is halal, the answer is rarely yes or no, it depends on how you engage with it.
- Halal: Buying Bitcoin or Ethereum on a spot basis, holding it transparently, or using stablecoins that are genuinely backed.
- Haram: Futures, options, CFDs, margin trading, and pump-and-dump schemes. These involve gharar, maysir, or riba, all of which invalidate the transaction.
The parallel is similar to shares. Owning stock in a halal company is permissible. Day-trading penny stocks on borrowed funds is not. The asset itself may be neutral, but the method can tip it into haram territory.
The Risk Reality
One lesson from Islamic finance is that risk should be tied to real value. In crypto, this line is blurred.
- Coins collapse when interest fades.
- Exchanges fail, leaving investors locked out.
- Fraudulent projects lure people in with promises of quick wealth.
For Muslims, the principle of avoiding gharar, excessive uncertainty, means being doubly careful. A balanced portfolio that includes sukuk, property, or equities alongside a limited crypto allocation is safer than going “all in” on digital coins.
Where Do We Go From Here?
Blockchain itself is not the problem. It is a technology of record-keeping, no different in concept from ledgers used for centuries. The challenge lies in how it is used and whether the products built on it align with Shariah.
The conversation is far from over. We still need clearer guidance on:
- The permissibility of privacy-focused coins.
- Whether networks whose primary activity is haram can still host halal tokens.
- The Shariah view on initial coin offerings (ICOs).
- How blockchain might be applied in halal finance beyond speculation.
Conclusion
Crypto is not haram by default, nor is it automatically halal. It sits in a grey space where the technology itself is neutral but the usage determines the ruling. A Muslim can buy and hold crypto as an asset, but must avoid speculative practices that resemble gambling.
In the end, the Shariah-compliant path is the cautious one. Treat crypto as a high-risk digital asset, not as a guaranteed ticket to wealth. Keep it a small part of a wider halal portfolio. And most importantly, remember that wealth in Islam is not just about growth, it is about barakah, and that can never come from haram means.