Invest Shariah, Gain Barakah
Digital assets as regulated under the jurisdiction of Securities Commission Malaysia (SC) consist of digital currency1 and digital token (Digital Assets). The definition and scope of digital currency and digital token which were defined as securities are as prescribed under the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019.2 Several issues from Shariah perspective in relation to Digital Assets were presented to the Shariah Advisory Council (SAC) of SC.
Since there are Digital Assets which are categorised as capital market instruments, the SAC had discussed the following issues from Shariah perspective:
SAC in a series of its meetings had discussed issues in relation to Digital Assets from Shariah perspective. The discussions on Digital Assets in the SAC meetings are limited to Digital Assets that are regulated by the SC. The SAC had, at its 233rd meeting held on 29 June 2020 and its 234th meeting held on 20 July 2020, resolved the following:
Digital currency is recognised as mal from Shariah perspective. The SAC had viewed digital currency from two scopes, as follows:
Digital currency in this form is categorised as `urudh and it is not a currency from Shariah perspective. Such digital currency is not categorised as ribawi items. Therefore, the trading of such digital currency is not subject to the principle of bai` al-sarf (currency exchange).
If a digital currency is backed by ribawi items comprising gold, silver and currency, it is categorised as a currency from Shariah perspective. Hence, the trading of such digital currency is subject to the principle of bai` al-sarf.
If a digital currency is backed by ribawi items other than gold, silver and currency, it is categorised as amwal ribawiyyah (ribawi items). Therefore, the trading of such digital currency is subject to the Shariah requirements of ribawi items.
Digital token is recognised as mal under the category of `urudh from Shariah perspective. In determining the Shariah status of a digital token, the following matters must be fulfilled:
The Grand Mufti of Egypt Shaykh Shawki Allam has declared that bitcoin and cryptocurrency is HARAM. The Shaykh cites these primary reasons in his statement, among others:
Based on many Shariah scholar viewpoint, we conclude that the Cryptocurrency activity and transaction is permissible with the strict ruling. The Cryptocurrency need to be valuable as our society value the assets same as a tangible asset. Until now, Cryptocurrency has been very valuable as can be seen on the market price reflected on many global exchanges. Furthermore, some of the Cryptocurrency have been accepted for payment in exchange for any goods through a variety of merchants.
Cryptocurrency must adhere our rules based on shariah perspectives that have been concluded:
Example: Proof of work is permissible