Sharlife is a Registered Shariah Advisory Firm with Securities Commission Malaysia - The only regulated provider of crypto & stocks Shariah status
Sharlife is a Registered Shariah Advisory Firm with Securities Commission Malaysia - The only regulated provider of crypto & stocks Shariah status
The rapid advancement of technology today—particularly in the realm of digital currencies such as cryptocurrency—has sparked growing interest and debate within the Muslim community, especially regarding the halal or haram status of its use. Beyond major cryptocurrencies like Bitcoin and Ethereum, meme coins have also emerged—speculative tokens that have captured the attention of many crypto enthusiasts. The rise of meme coins often fuels discussions about their Shariah compliance, as they are frequently associated with speculation rather than real economic value. The discussion around cryptocurrency is not limited to its use as a trading tool, but also extends to its role as a long-term investment asset—for example, Bitcoin, which is often referred to as “digital gold.” As the adoption of cryptocurrency continues to expand, particularly among Muslims, the question of its permissibility under Islamic principles becomes increasingly important to ensure alignment with Shariah values.
This article will provide a concise yet insightful overview of cryptocurrency, its classification, and the Islamic perspective on its usage and investment.
Cryptocurrency is a form of digital currency that uses cryptographic technology for security, making it difficult to counterfeit. It operates in a decentralized manner—meaning it is not controlled by any government or central bank—and functions on a peer-to-peer basis, allowing anyone to send and receive payments directly, from anywhere in the world.
Cryptocurrencies exist solely in digital form, with all transactions recorded on a transparent and immutable public ledger known as the blockchain. These digital assets are stored in digital wallets and do not have a physical form like traditional fiat money.
According to data from CoinMarketCap, there are over 9,000 crypto tokens listed in the market. Generally, these tokens can be classified based on their utility, stability, and market adoption. Below are several categories of cryptocurrency based on their function and purpose:
Payment Cryptocurrencies
This group consists of cryptocurrencies specifically designed for transferring value across borders. Their blockchain networks focus on transaction efficiency and security, without advanced features like smart contracts. Therefore, their main function is direct digital payment.
Examples: Bitcoin (BTC), Ripple (XRP), Litecoin (LTC), Bitcoin Cash (BCH)
Cryptocurrency Platforms
This category includes tokens used on platforms that enable the development of decentralized applications (dApps) and smart contracts. They serve as the technological foundation for building new projects, including various tokens, financial systems, and services within the blockchain ecosystem.
Examples: Cardano (ADA), Polkadot (DOT), Ethereum (ETH)
Governance Tokens
These tokens give holders the power to participate in the decision-making process of a blockchain project. Users can vote on system upgrade proposals, reward structures, and the project’s direction, making governance more democratic and transparent. They are commonly used in decentralized finance (DeFi) and blockchain-based games (GameFi).
Examples: Uniswap (UNI), Maker (MKR)
Meme-Based Tokens
Meme coins are tokens inspired by internet culture and online humor. While they often start as community projects or parodies, some have reached significant market value through the influence of social media and strong communities. Their value is often not directly tied to real utility or technological fundamentals, making them highly speculative.
Examples: Shiba Inu (SHIB), Dogecoin (DOGE), Bonk (BONK), Pepe (PEPE)
Each type of cryptocurrency has its own characteristics, functions, and risks. The question that arises is: do all these types of cryptocurrencies comply with Shariah principles?
Read more here: Are Meme Coins Halal or Haram?
The fatwa rulings on cryptocurrency vary by country and institution, depending on how digital assets are viewed within the framework of Shariah. Generally, many fatwa institutions such as Dār al-Iftā’ al-Miṣriyyah (Egypt), the High Council of Religious Affairs of Turkey, and the Islamic Affairs and Charitable Activities Department Dubai have declared the use of cryptocurrencies as prohibited (haram). Their main arguments are that cryptocurrencies are not recognized by governments or central banks, involve gharar (excessive uncertainty) and khaṭr (high risk), and lack transparency regarding issuer and user identities—making them vulnerable to fraud and misuse, including money laundering. Thus, they reject cryptocurrencies as valid currencies under Shariah.
However, there are also scholarly opinions that permit the use of cryptocurrencies under certain contexts. For instance, the Islamic Economic Forum (2018) argued that the default ruling in Islamic law is permissibility (ibahah) unless there is clear evidence prohibiting it. Cryptocurrency is considered māl al-mutaqawwim—assets that are lawful to own and trade because of its benefits do not conflict with Shariah principles and there is no explicit prohibition in Islamic texts. Meanwhile, the Shariah Advisory Council of the Securities Commission Malaysia (2020) which at that time led by Dr. Mohd Daud Bakar classified cryptocurrencies not as currencies but as commodities or ‘urudh. If backed by physical assets like gold or silver, they would be subject to rulings applicable to ribawi items. Digital tokens may be acceptable, provided their benefits and returns comply with Shariah requirements.
The Mufti Wilayah Persekutuan of Malaysia (2018) took a cautious approach, stating that Bitcoin does not meet the criteria to be considered a currency, as it functions more like an investment asset. It also failed to fulfill its original purpose as an alternative to fiat currency due to its volatility and lack of regulation. However, the Mufti acknowledged that the value and ownership of Bitcoin cannot be denied, and its ruling could change if improvements are made in regulation, security, and oversight systems. This follows the principle of Sadd al-Zarai’—preventing greater harm by restricting access to risky avenues.
Overall, fatwa discussions focus more on the suitability of cryptocurrency as a currency, rather than denying its status as an asset. Hence, while many scholars prohibit its use as a medium of exchange, some do not dismiss the potential for cryptocurrencies to become Shariah-compliant under specific conditions.
In general, the halal or haram status of a cryptocurrency depends on its characteristics and functions. Therefore, a crypto asset is considered al-mal if it meets the following criteria:
Must have attached value
Must be beneficial with regards to custom
Can be utilized and stored with clear ownership
No prohibited elements
Fundamentally, investment is permissible (halal) based on a comprehensive analysis of an asset or business’s fundamentals—not on blind speculation. This approach emphasizes the importance of understanding the structure, value, core business, and potential of an asset before making financial decisions.
Many scholars argue that Bitcoin and other crypto assets can be classified as māl based on three key points:
The original ruling of permissibility (al-ibāhah al-asliyyah).
It is recognized as a māl mutaqawwam(valuable asset) in Shariah, as it can be used to purchase goods, services, or exchanged for other currencies.
Bitcoin is used as a medium of exchange, even though it is not issued by a central authority.
However, some scholars adopt a more cautious stance, citing reasons such as:
Price volatility,
Lack of intrinsic value,
And high levels of gharar (uncertainty) in the crypto market, which could affect its Shariah compliance status.
At Sharlife, we offer Shariah-based crypto investment guidance, helping you understand real risks, identify Shariah-compliant assets, and build a responsible investment strategy in this dynamic world of digital assets.
The halal or haram status of cryptocurrency in Islam must be assessed individually for each type of cryptocurrency, taking into account how well it aligns with Shariah principles—such as being free from elements of riba (interest), gharar (uncertainty), qimar (gambling), and dharar (harm), as well as being conducted in a transparent and lawful manner. In general, its use is permissible (mubah) if it fulfills the necessary conditions and pillars of a valid transaction. However, there are differing views among scholars and religious institutions. Therefore, Muslims are encouraged to consult their local Shariah authorities before actively engaging with cryptocurrencies. Lastly, Muslims are advised to respect the diversity of scholarly opinions (ijtihad) that exist regarding this issue.
