Is cryptocurrency halal

Is cryptocurrency halal

is cryptocurrency halal? this is the question about which every Muslim crypto trader thinks. Cryptocurrency is also known as the last hope for the middle class to get financial freedom. One of the ways to become rich is by trading cryptocurrencies. However, Islamic people don’t grab the opportunity because they don’t exactly know whether cryptocurrency is halal.

almost every Muslim entrepreneur is interested in investing in the crypto market but on the other hand, when it comes to religion Muslims strictly follow the Islamic rules about cryptocurrencies, some Islamic scholars consider cryptocurrencies as halal, and some as haram.

Islamic scholars debate about cryptocurrency halal or haram

there have been many debates in the past related to cryptocurrency but there is no clear answer to whether cryptocurrencies are halal.

as a Muslim and a professional crypto trader, I will clear all your doubts about whether cryptocurrency or Bitcoin trading is halal or is haram and permitted by Islamic scholars.

let’s get the answer

know the basic structure of the crypto market to know that is cryptocurrency halal

in the crypto market there are two types of trades spot and future let’s discuss these both to know the principle of halal and haram in cryptocurrencies.

1. spot trading halal or haram concept

spot trading is the type of trading in which the trader follows the principle of “ buy low and sell high” Let’s say the trader buys xyz coin for 10$ and after 2 days the price increases from 10$ to 15$ so in this case the trader makes a profit worth of 5$ and this is called spot trading where the trader buy low and sells high.

2. future trading halal or haram concept

Future trading has some different principles than spot trading, in this trading, the trader opens long to the specific coin when he/she sees that the demand is very high and closes short his/her trade when the specific coin seems to go down, let’s say XYZ coin is on 15$ and has a chance of going down and the trader has 15$ worth of funds.

so he/she shortens the xyz coin with 10x leverage and the coin goes to 13$ now his/her profit or losses will be multiplied by 10, he/she shorts xyz coin with 10x leverage so he/she makes 20$ profit by this trade and this type of trading is called future trading.

you need to remember 2 points here

  • a specific amount of fee is charged that is based on leverage taken by the trader.
  • user profits and losses are multiplied by the amount of leverage.

now we have understood the types of trades and how they work so now we’re gonna understand what type of trade is halal and what type of trade is haram.

what’s not halal in Islamic teachings

if we pay a specific amount that has not been committed before is not in Islam and is called “SOUD” in Islam and if we bet in Islam then this is also not halal in Islam.

Final thoughts: is cryptocurrency halal

in spot trading the exchange where we trade charges a small amount of fee and we just buy the coin based on our analysis like other businesses so in crypto trading spot trading is halal to do.

but in future trading, they charge us a fee based on the leverage we take while trading crypto and we often bet over there as a result we can say that spot trading is halal, and future trading is considered haram in Islam.

However, some Islamic scholars still declare future trading as halal.

Islamic scholar video on cryptocurrency halal or haram

Below you can see a video of a famous Muslim scholar who is talking about cryptocurrencies halal or haram.

is cryptocurrency halal answered by a famous muslim scholar

Reasons why some people still declare cryptocurrencies not halal

I hope you have got the answer about what you were searching for, now let’s discuss some more reasons due to which some people consider that Cryptocurrency is not halal.

The cryptocurrency market is highly volatile

as compared to the Stock market, The Crypto market is highly risky and volatile, as of May 2023 the bitcoin price was nearly about 26,000$ but as of March 2024, the price was nearly 68,000$.

due to its high-risk factor, some people consider cryptocurrencies as haram. However, the volatility of the crypto market can not declare cryptocurrencies as haram.

cryptocurrency is not regulated in some Muslim countries

cryptocurrencies are not regulated in Muslim countries like Pakistan and Indonesia, due to which people usually consider cryptocurrencies as unsafe and even some Muslim scholars also don’t talk openly about crypto trading.

However, in Pakistan, the government has started taking some steps to regulate cryptocurrency. In this case, crypto regulation does not have any direct link to declare cryptocurrencies as halal.

cryptocurrencies do not have any physical form

some Islamic scholars don’t consider cryptocurrencies as halal because cryptocurrencies don’t have any physical form, although I think that cryptocurrencies are the digital form of money, cryptocurrencies are also used to transfer money besides trading it.

cryptocurrencies cannot be declared as haram because they offer the same purpose as physical money.

these are some of the reasons why some people and Muslim scholars don’t think of Cryptocurrency as halal, I have clarified every point that makes cryptocurrency halal to trade.

what type of cryptocurrency is haram

cryptocurrencies are halal to trade but they can be haram in only one way when the project is itself haram and it offers such uses that are against Islamic teachings.

More assistance from Yallutimes

I hope your all questions and queries have cleared, now if you want to know more about cryptocurrencies you can click here.