Muslim scholar declares bitcoins, cryptocurrency halal

Amid the rise of cryptocurrency market, the debate of whether it is halal or haram has always been confusing many, however, a Muslim scholar from Indonesia has opened the door to bitcoins and the rest for billions of people after he declared the currency halal.

A study titled Shariah Analysis of Bitcoin, Cryptocurrency and Blockchain, conducted by Muhammad Abu-Bakar of Blossom Finance in Indonesia, explored the functionality of bitcoin and other cryptocurrencies to determine whether they fit with Islam’s strict definitions of money.

“Bitcoin and similar cryptocurrencies fulfill the economic roles of money - acting as medium of exchange, unit of account, and store of value - and also gain status as Islamic money by being 'customary money'. Shariah recognizes customary money as being anything that gains monetary status through wide acceptance in society or by government mandate,” stated the study.

The study’s author, Abu-Bakar, further points that bitcoin is recognised as a legal currency in Germany and therefore qualifies as Islamic money in that country.

“In Germany, Bitcoin is recognized as a legal currency and therefore qualifies as Islamic money in Germany. In countries such as the US, Bitcoin lacks official legal monetary status but is accepted for payment at a variety of merchants and therefore qualifies as Islamic customary money,” states the author.

The price of bitcoin are often dependent on the positive or negative news in the cryptocurrency market and this latest study may have had some influence in the recent rise and could help contribute to future gains.

Meanwhile, the virtual currencies like Bitcoin, Litcoin, Pakcoin, DasCoin, Pay Diamond etc are not recognized as a legal tender in Pakistan nor the SBP has authorized or licensed any individual or entity for the issuance, sale purchase, exchange or investment in any such currency in Pakistan.