Fintech Startup Report Concludes Bitcoin Is ‘Generally Permissible’ Under Sharia Law
A report by Mufti Muhammad Abu Bakar argues that Bitcoin and other cryptocurrencies are generally permitted under Sharia law.
Blossom Finance, a fintech startup based in Indonesia, has released a report by their internal Sharia advisor that concludes that Bitcoin (BTC) is “generally permissible” under Sharia law, according to a press release published Thursday, April 12.
In late February, Cointelegraph also published a story on whether Bitcoin was halal, including information from Blossom Finance CEO and Founder Matthew J. Martin (also interviewed by CT in 2015), who told CT that not only is Bitcoin halal, it may be even more halal than fiat currencies due to it being based on Proof-of-Work, rather than on debt.
Blossom’s report, dated April 5, is titled, “Is Bitcoin Halal or Haram: A Sharia Analysis,” and written by Muhammad Abu Bakar, a certified Mufti (Muslim legal expert) as well as Haziz, having successfully memorized the Qu'ran in 2002.
Earlier today, Bitcoin’s price rose by more than $1,000 in 30 minutes, a jump that could be attributed to an increase in Muslim crypto traders since the report’s release today.
Abu Bakar summarizes all of the various definition in Islam for both property (mal) and currency as a way of deciding whether or not cryptocurrencies like Bitcoin fall under the halal (permissible) category, or the haram (prohibited), as well as listing the various Islamic organizations globally that have issued official stances about Bitcoin’s role in Islam.
Abu Bakar uses these two definitions in order to refute the reasons why some organizations, governments, and people (including the Grand Mufti of Egypt, the Turkish Government, the Fatwa Center of Palestine, and scholar Shaykh Haitam) have said that cryptocurrency is haram.
An analysis of the common reasons for this “prohibited” categorization shows that crypto not being legal tender is a main point in labeling Bitcoin haram. However, Abu Bakar writes that since crypto is widely accepted, its legality or illegality as tender does not disclude it from being money; another reason is that crypto is not controlled by a central authority – Abu Bakar writes that crypto technology, like Blockchain, can be more secure than the current systems in place.
Abu Bakar concludes with a slight warning, noting that while he considers cryptocurrencies to be halal in most cases (excluding jurisdictions where crypto is banned), crypto traders should not purchase cryptocurrencies for investment purposes:
“Rather, it is advisable to utilize cryptocurrency networks as a payment system in the cases where cryptocurrency network offer specific benefits and advantages over conventional systems.”
Abu Bakar also warns the Muslim community to stay aware of Initial Coin Offering (ICO) scams that promise fixed returns on a “halal investment.”
NOORCOIN, a cryptocurrency certified with a Sharia Certificate from the World Sharia Advisory Committee, according to its March 19 press release, markets itself as the “world's first sharia-compliant utility token.” NOORCOIN was not designed specifically for Muslims, but the press release is clearly targeted, noting that its Sharia compliance will allow the world’s Muslims to enter the crypto sphere.