Full Lecture Transcript (Cleaned)
The Question — 0:00
What is the Islamic ruling on cryptocurrencies?
What Is Cryptocurrency? — 0:20
Cryptocurrencies are a new form of decentralized commodity. The point of cryptocurrency is to be a type of currency that is not backed by a government, not backed by a known institution, and not backed by banks. It is created by groups of people that are generally not sympathetic to banks and governments. The first and most famous cryptocurrency was created by the Japanese pseudonym Satoshi, who created Bitcoin. From the success of Bitcoin, thousands of different cryptocurrencies have emerged.
The Fiqh Council's Fatwa — 0:50
Last year the Fiqh Council of North America dedicated a significant amount of time to discuss cryptocurrencies at our annual meeting. We went over this issue in a lot of detail. By unanimous consensus, we issued a fatwa — specifically about Bitcoin. Every currency has its own ruling; the generic ruling we derived is that we did not find any reason to prohibit cryptocurrency, and therefore it remains at the default.
Memorize this simple principle, dear brothers and sisters: when it comes to actions and interactions with money, walking, eating, and drinking — everything is halal unless the Sharia says it is haram. If two people are debating whether it is halal to drink water from a plastic bottle, who needs to bring the evidence? The one who says it is haram. The one who says it is halal does not need to prove anything — everything is halal unless proven otherwise.
Examining Each Objection — 2:00
We looked at every criticism of cryptocurrency and examined the fatwas of committees around the globe — some said it is haram, some said it is halal.
For example, they said there is no value to cryptocurrency. The response to this is that value is relative. An original used Nike shoe from 1973 sold for $250,000 — I don't see any value in an old shoe, but some people do. Some of us have corals in our houses worth $50 to $100, while in the Pacific islands they are worthless. Value is relative.
They said there is no government backing. The response is that you don't need a government to give something value.
We looked at every objection one after another and came to the conclusion: there is no issue that makes cryptocurrencies haram in general, and Bitcoin specifically.
The Ruling — 4:00
It is halal to mine Bitcoin, halal to invest in it, and halal to buy and trade it. However, the value rules of fiat currency apply: spot trades must occur at the current value at the time of purchase. You cannot delay a transaction or leave an unknown value pending. Just as when you exchange dollars for pounds, it must be done instantaneously — the same applies to cryptocurrency trades.
Caution Despite Permissibility — 5:00
We concluded the fatwa by saying: even though we say it is halal, there remains a gray area, especially in terms of safety and wisdom. As the Fiqh Council, it is not our job to give investment advice, but we agree with investors who say: do not invest in crypto more money than you are willing to lose. The Muslim is not foolish and should not spend money foolishly.
The base ruling for cryptocurrencies — and in particular Bitcoin and the major established ones like Litecoin — is halal. For every new cryptocurrency a separate ruling would need to be derived.