Is Cryptocurrency halal to invest?

S

sherkhan

sunniport user
With the crypto-currencies (bitcoins etc.) in a seeming bubble, it is probably worthwhile to deliberate if these are halal to invest in. Please ignore the investment/economic rationale and set aside safety/prudence considerations for the time being.

Cryptos have come a long way from being dark-web currency. Are these too speculative, prone to market manipulation? Too artificial to be called money/currency? More than currencies, should these be viewed as stocks/shares (at least these don't have the taint of business engaging in haraam activities)?

Any thoughts?
 
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we started discussing it here: http://sunniport.com/index.php?threads/bitcoin-and-about-murtaddeen.11688/#post-47112

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i will cut/paste the same here:


so the question is: how do you deal with bitcoin as "thaman" or should it be deemed "thaman"?

laws concerning its commerce and financial capacity as a "currency".

the lament of the anarchist in this post is evidently justified: http://dailyanarchist.com/2013/01/30/is-bitcoin-sharia-compliant/

http://www.maxkeiser.com/2013/04/is-bitcoin-sunnah-money/

https://bitcointalk.org/index.php?topic=370994.0

https://bitcointalk.org/index.php?topic=358172.0

http://www.bitcoinobserver.com/news/Bitcoin-and-Islamic-Finance--Jan-Bergstra.pdf

http://islam.stackexchange.com/questions/7961/is-bitcoins-a-halal-investment-instrument

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the key point that i am trying to make is that - most islamic scholars are unaware of what's happening in tech (and the world). whether bitcoin or apple pay. sadly, scholars from the subcontinent seem to be the farthest and least interested.

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bonus point: you can discuss bitcoin on our forum.

UPDATES:
many forums and communities are discussing this.

http://www.islamiceconomist.com/?p=1488

https://alkhilafaharidat.files.wordpress.com/2014/07/btcedit-21.pdf

http://forums.islamicawakening.com/f20/is-bitcoin-halal-what-is-bitcoin-57471/index9.html

https://www.igot.com/?gclid=CLOTvaep18ACFQcHwwodzr8AsA




DISCLAIMER: the links above do not mean that i endorse those PoVs.
 
Someone needs to look into this and not think that this phenomenon is in some distant future like 200 years from now. In fact, I think the signs point to adoption of crypto currencies to replace paper money as something that is on the verge of becoming a reality in the next few years. The advancement of this new "Tech"era will bring with it a new financial status quo so we need to know from now the rulings related to these things.
 
It looks like bitcoin wears two hats- one, currency and the other a commodity which could be invested in. Certainly, the technology that it sits on such as blockchain could be looked at as viable for investment purposes but even then it's use in haraam sectors like riba requirees for it to be properly scrutinized andd Allah Knows Best
 
An answer to whether it is permissible to invest in the various forms of cryptocurrencies should be sought from a reputable Sunni mufti (or a panel of muftis).

However, the difficulty with that is explaining to them how cryptocurrencies work. Even if you do a great job of explaining, they may not understand fully due to the (sort of) intricate nature of it. In fact, not even many from the laity understand how blockchain and cryptocurrencies work. Maybe we should, together, draft an istifta in English and urdu which can be sent to various reputable dar al-iftas.

Kifl al-Faqih, muna wa al-durar and fatawa ridawiyyah Vol 17 of alahazrat would be a starting point.

Questions to provoke thinking:
Can cryptocurrencies fall under the category of ‘maal’ (property)? Cryptocurrencies are intangible, which is an important aspect when considering whether it can be ‘maal’ or not. There are four types of maal generally, of which one is ‘that which is always thaman’. So the main question to answer is whether cryptocurrencies are a form of maal, and if so, which type of maal is it.

I very much doubt it can fall under the category of ‘currency’ as it is not widely accepted as a form of payment nor used as such by the general population (these are general points mentioned about the nature of thaman e istilahi in fiqh books). However, that begs the question: what are all the requirements for something to become a currency according to the shari’at? The situation may change in the near future, whereby people accept and use cryptocurrencies as an actual form of payment, which also needs to be addressed for when the situation does happen.

If it is deemed to be currency, it would have to be thaman e istilahi/urfi (currency due to public usage and acceptance) of course and not thaman e khalqi (created as currency: eg gold and silver).

Then there is the important fact that crypto trading occurs mainly online. This is important due to the ‘one majlis’ (sitting) requirement for bay’. If it is deemed a currency, then there is also the requirement of gaining control over one (either the cash or the purchased cryptocurrency) within that sitting in which the transaction was agreed.

There are many many important points to consider...
 
if you listen to borg in this clip - he makes a statement that is very closely the situation a mufti may find himself in.

https://www.cnbc.com/2017/12/11/people-are-taking-out-mortgages-to-buy-bitcoin-says-joseph-borg.html

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he says:
innovation always outruns regulation. right now there is very little regulation in this entire area. we are waiting to see what happens.​

at around 1.00 he says: 'at this point it is not a real commodity'

around 1.28 he says:

'innovation and technology always outrun regulation. that is a given. the technology as it continues to accelerate..it continues to increase..regulators need to understand what it is that the innovation is coming up with. and we are still trying to get educated.'​

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the mt.gox that he mentions in the clip: https://en.wikipedia.org/wiki/Mt._Gox


https://en.wikipedia.org/wiki/Joseph_Borg_(regulator)

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ridawi said:
Then there is the important fact that crypto trading occurs mainly online. This is important due to the ‘one majlis’ (sitting) requirement for bay’. If it is deemed a currency, then there is also the requirement of gaining control over one (either the cash or the purchased cryptocurrency) within that sitting in which the transaction was agreed.
Click to expand...

From what I know, the requirement of one majlis can be fulfilled even through posts and online transactions, so that should not be a problem. However, one thing we know for sure is that benefit coming to us through aqd e fasid is also halal if the other party is not a muslim, which brings me to the question, whether not possessing a thing one is selling makes the sale fasid or batil, and secondly, whether the rule regarding aqd e fasid would also apply with 'bay batil': in fact this is one question I have sent to a sunni darul ifta, and I await its answer.

Lastly, since, as with online commodity and share trading, we don't know who we are selling the thing to, so the question is, as it's possible that the person buying from us is a muslim at the other end, can we still take the benefit from an aqd e fasid? I asked a similar question to a mufti about accepting profit from banks in countries like India, where it is very likely that the 'interest' earned by the bank also consists of muslims making payments on their loans, so how does it remain jayiz to receive benefit from it. He said it's jayiz, as the ruling would be based on majority.
 
I know mufti akmal have said, one should avoid it.

But i feel some of our scholars say it due to, not having researched/understood the topic properly.
 
sunniislam said:
I know mufti akmal have said, one should avoid it.

But i feel some of our scholars say it due to, not having researched/understood the topic properly.
Click to expand...

Cryptocurrencies, stocks and shares etc are those types of contemporary issues which only a few muftis would be able to properly answer due to its technical and complex nature. This is similar to what alahazrat wrote in al-muna wa al-durar regarding money order fees.
 
From Mufti Monawwar Ateeq's Facebook page:

Initial Thoughts on Bitcoin

1. The creator of bitcoin is disputed and no one regulates it so there is no one to complain to and hence the risk associated with it is very high due to severe ambiguity (Gharar Shadeed). It will take several years for world economies to accept and regulate it.

2. It is not tangible and is only virtual. Islamically, it’s not a currency backed by any assets and it is not a common medium of exchange in most parts of the world including most western countries nor is it a commodity. World financial authorities are skeptic about bitcoin for obvious reasons including economic interests such as its impact on tangible currency.

3. The bitcoin field is infant and open to many risks like fraud. Some companies have scammed people’s money.

4. Lastly, virtual currency is notoriously used to whiten black money from drugs and to pay illegal ransoms across borders.

My advice to all those asking for advice is: Humans naturally desire generating fast income. Don’t waste your precious and hard earned money on this severely ambiguous and highly risky venture. Remember only that which Allah Almighty has destined for you shall come your way and what was never written will never be yours.
 
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