Islamic Scholars and Bodies
Ruling on Cryptocurrency
A comprehensive, unabridged repository of formal rulings, foundations, and jurisprudential debates concerning the permissibility of cryptocurrency by the world's leading Islamic scholars and advisory bodies.
General Rulings & Scholarly Positions
Mufti Muhammad Abu-Bakar
The Blossom Finance Landmark Paper
The single most widely cited scholarly work declaring Bitcoin permissible is "Shariah Analysis of Bitcoin, Cryptocurrency, and Blockchain", authored by Mufti Muhammad Abu-Bakar and published by Blossom Labs, Inc. in April 2018. The paper was drafted in 2017 and formally released on April 10, 2018, triggering global media coverage and — according to multiple analysts — contributing to a $1,000 surge in Bitcoin's price within hours of its announcement.
Abu-Bakar's credentials place him firmly in the Hanafi tradition. He completed his Takhassus fil Ifta (specialization in Islamic juristic rulings) at Jamia Darul-Uloom Karachi, one of the world's foremost Hanafi/Deobandi institutions, where he authored over 400 fatawa through the Darul Ifta. He holds an MSc in Islamic Finance and is a Certified Shariah Adviser and Auditor (CSAA) from AAOIFI. At the time of the paper, he served as Internal Shariah Advisor and Shariah Compliance Officer at Blossom Finance in Jakarta. He subsequently advised ADAB Solutions (a Shariah-compliant crypto exchange) and went on to serve as Resident Shariah Board Member at Dubai Islamic Bank.
His central conclusion: Bitcoin is permissible in principle because it qualifies as both mal (property) and customary money under Shariah. The Hanafi jurisprudential reasoning is precise. Classical Hanafi scholars like Ibn Nujaim defined mal as "something which is desirable and can be stored for the time of need," with the caveat that the traditional Hanafi position limits mal to tangible things. Abu-Bakar bridges this gap by citing contemporary Hanafi authorities — including Mufti Taqi Usmani himself — who expanded the definition through the principle of urf (custom). If intangible things like copyrights and trademarks can be mal because society treats them as valuable, Abu-Bakar argues, so can Bitcoin: it is desirable, storable in digital wallets, and widely accepted for exchange.
Abu-Bakar introduced a jurisdictional framework with three tiers. Where cryptocurrency is government-banned, dealing in it is impermissible. Where regulators are silent or cautionary, it is permissible. Where regulators have accepted crypto as a financial asset or alternative currency, it is clearly permissible. He wrote: "Bitcoin and cryptocurrency cannot be declared haram based on the fact that they experience speculation. If this principle was valid, then trading in gold, silver, US Dollars, and Euros would all be ruled impermissible, since those assets also experience extreme levels of speculation."
He did attach important conditions. He explicitly warned that buying crypto purely for speculative investment "is against the basic objective of currency," that ICOs are "highly uncertain" and likely contain excessive gharar, and that Muslim communities should exercise particular caution against "halal investment" scams. He emphasized that the preservation of wealth (hifz al-mal) is a fundamental Maqasid al-Shariah objective, and crypto's volatility demands careful risk management.
Blossom Finance itself was founded in October 2014 by Matthew Joseph Martin, an American who embraced Islam in 2010 and launched the company at the BoostVC incubator in San Mateo, California. Its investors include Tim Draper (DFJ) and Jabbar Internet Ventures. Martin stated: "Blockchain gives you mathematical proof of ownership and that's overall much more in line with the spirit of Islamic finance than any digital fiat money."
Mufti Faraz Adam
Evolving Scholarly Framework
Mufti Faraz ibn Adam al-Mahmudi is among the most prolific contemporary Hanafi scholars working at the intersection of Islamic law and financial technology. He is the founder and CEO of Amanah Advisors (formerly Amanah Finance Consultancy Ltd) and the founder of DarulFiqh.com, a fatwa portal that operates by default on Hanafi jurisprudence. His educational credentials are extensive: a six-year Alimiyyah program at Darul Uloom Leicester (UK), Mufti specialization at Darul Iftaa Mahmudiyyah, Durban under Mufti Ebrahim Desai, an MA in Islamic Theology with specialization in Iftaa, a Master's degree in Islamic Finance from Newman University, an MBA, a Fintech specialization from the University of Michigan, and ACCA Level 4 in accounting. He serves on Shariah boards at Sidra Capital and Al Khabeer Capital in Saudi Arabia, and holds advisory positions spanning Bahrain, Singapore, Dubai, the UK, and the US. He is currently pursuing a PhD on Shariah governance frameworks for artificial intelligence.
His position on crypto has demonstrably evolved through three phases. In his 2017 research paper "Bitcoin: Shariah Compliant?" — a detailed 60+ page analysis — he concluded that Bitcoin "does seem to be Mal with Taqawwum" (property with legal value) but does not possess Thamaniyyah (full currency attributes). He was cautious, stating Bitcoin was "not ideal as a long-term investment" and that the Islamic finance industry should not consider its use in exchange until a regulated framework existed.
After industry feedback and further research, his position shifted significantly. On DarulFiqh.com, in a piece titled "Shariah Interpretations of Bitcoin," he analyzed three possible classifications and concluded: "My personal view and opinion is that Bitcoins are in the ruling of a currency. They will be a currency as long as people use and exchange them. As a result, Zakat will be compulsory on Bitcoin due to their monetary nature and Thamaniyyah." He argued that "all other issues with regards to volatility, laundering, black markets etc. are all external matters which need controls and regulation to address them."
His most mature framework, articulated in his 2020 book "Introduction to Islamic Fintech" and a 2021 Amanah Advisors article, holds that crypto-assets with a lawful utility can be deemed mal and property from a Shariah perspective. He wrote: "To deny the existence of crypto-assets is clearly inaccurate; existence in a digital network cannot be quantified nor qualified with the same metrics as that of physical entities." He considers it "premature to consider crypto-assets as universal currencies" but recognizes their validity as medium of exchange within specific networks based on al-Urf al-Khass (customary practice of a specific group). He developed a five-point Crypto Shariah Screening Framework — covering legitimacy, project compliance, financials, token structure, and staking mechanisms — currently used by platforms like HalalSignalz to screen cryptocurrencies.
Mufti Faraz Adam also co-authored "Currency in Islamic Law: A Sharī'ah Analysis of Bitcoin" with Mufti Abdul Kadir Barkatulla, published as Chapter 9 in the Routledge volume Fintech in Islamic Finance: Theory and Practice (2019), giving his analysis peer-reviewed academic standing.
Fatwa councils and regulatory bodies that permit cryptocurrency
Several formal Islamic institutions have issued rulings supporting or conditionally permitting cryptocurrency. The most significant are:
Issued the most consequential regulatory ruling at its 233rd and 234th meetings on June 29 and July 20, 2020. The SAC resolved that investment and trading of digital assets on SC-registered Digital Asset Exchanges is permissible under Shariah. It classified digital currencies as 'urudh (goods/commodities), not as currency, meaning they are not subject to bai' al-sarf (currency exchange) rules. Permissible assets include Bitcoin, Ethereum, Cardano, Chainlink, Litecoin, Ripple, Solana, and others traded on registered Malaysian exchanges. SAC Chairman Dr. Mohd Daud Bakar stated crypto has "great potential" and compared it to reward points — an abstract tool that can be freely traded. The SAC operates within Malaysia's predominantly Shafi'i tradition but functions as a multi-school institution.
Adopted a formal resolution on September 2, 2019 in Houston, prepared by Dr. Yasir Qadhi and Dr. Abdulbari Mashal, declaring Bitcoin "essentially halal." The ruling invoked the foundational maxim al-aṣl fi'l-ashyā' al-ibāḥah (the default in transactions is permissibility), finding that objections based on anonymity, uncertain future value, and lack of government regulation "are not strong enough to warrant a verdict of impermissibility." Bitcoin is to be treated with the same Islamic rulings as fiat currencies — meaning riba rules apply, exchanges must be done as spot-trade at the current rate, and Zakat is obligatory on holdings. Mining was deemed permissible. The ruling was specific to Bitcoin, noting other cryptocurrencies may require separate examination.
Licensed by the Central Bank of Bahrain as a Shariah advisory firm, published a 2018 research paper concluding that cryptocurrencies can be Shariah-compliant if structured correctly. The SRB certified the Rain cryptocurrency exchange (covering Bitcoin, Ethereum, Litecoin) and CoinMENA as Shariah-compliant digital asset exchanges. In 2025, SRB confirmed XRP (Ripple) as Shariah-compliant. Their key principle: it would be "inaccurate to give one ruling for all cryptocurrencies" — each must be assessed individually.
Classified Bitcoin as mal (Shariah-recognized property) and deemed it permissible. Several prominent South African scholars — including Mufti Radha ul-Haqq, Shaykh Taha Karaan, and Mufti Siraj Desai — have similarly ruled cryptocurrency permissible on the basis that it has been accepted through social norms (istilah) regardless of government regulation.
Major bodies that prohibited or deferred judgment on crypto
For completeness and accuracy, several major bodies have taken opposing positions.
Dar al-Ifta al-Misriyyah (Egypt), under Grand Mufti Shawki Ibrahim Allam, issued Religious Decree No. 4205 on December 28, 2017, declaring Bitcoin haram — citing gharar, criminal use, lack of central authority, and risk to national economic security.
Turkey's Directorate of Religious Affairs (Diyanet) declared crypto "not compatible with religion at this time" in late 2017, following Hanafi reasoning.
Indonesia's MUI ruled crypto haram as currency in November 2021 but created a narrow exception for asset-backed tokens meeting Shariah commodity requirements.
The UAE's General Authority for Islamic Affairs issued Fatwa No. 89043 in January 2018 deeming crypto impermissible — but crucially added that if authorities "regulate and adopt them and place them under a supervisory umbrella," the ruling would change to match that of officially recognized currencies.
The two largest transnational bodies — AAOIFI and the International Islamic Fiqh Academy (OIC) — have not issued definitive rulings. The IIFA's Resolution No. 237 (November 2019) acknowledged the complexity and recommended further research. AAOIFI's Secretary-General Omar Mustafa Ansari stated it is "not in our immediate agenda" and that "people have to be careful."
Other notable scholars and their verified positions
(Hanafi), former Supreme Court judge of Pakistan's Shariat Appellate Bench and former Vice President of the International Islamic Fiqh Academy, is the most prominent dissenting voice. In an endorsed statement dated May 10, 2021, he said: "For now, we are not satisfied with it. It is mostly being used for speculative purposes. Personally, I won't recommend it. Rather it seems to be impermissible in principle. However, it could happen that in the future, its use may expand for real trade and we might have to revisit the current decision." His position falls between makrooh (disliked) and impermissible, and he has explicitly left the door open for reassessment.
One of Islamic economics' founding figures — PhD from the University of Utah, former Senior Research Economist at the Islamic Development Bank's IRTI, winner of the 2001 Prize in Islamic Economics — issued what is widely cited as one of the earliest Islamic scholarly opinions on cryptocurrency in 2014. He deemed Bitcoin a "legitimate medium of exchange" comparable to other types of money but cautioned about "low confidence and high chance of manipulation in the open market." He did not declare it haram.
Chairman of the Shariah Committee of HSBC Amanah Malaysia, Visiting Fellow at the Oxford Centre for Islamic Studies, and consultant to the World Bank, has taken a cautiously supportive position. He argued that Shariah does not require a currency to have intrinsic value — social acceptance and usability matter. He stated: "A large group of scholars say cryptocurrencies are permitted because of the social concurrence concept," though he emphasized that each cryptocurrency must be assessed individually and that "more evidence is needed to reach a consensus."
(Hanafi), who co-authored the Routledge chapter with Mufti Faraz Adam, argued that Bitcoin-style crypto could be an effective instrument for Islamic finance, stating: "Any money or currency is neither halal nor haram. Guidance is about its value which it represents."
(Hanafi, Darul Uloom Bury and Darul Uloom Blackburn trained), Director of Shariah Experts Ltd and former Chief Shariah Compliance Officer at Marhaba DeFi, stated: "My view is that Bitcoin in itself is halal to purchase and trade. However, in the UK context, I do not currently see it as a recognised currency from a shariah perspective."
Based in Jeddah, has declared crypto haram, citing anonymity, volatility, and gharar. He follows a Salafi methodology (not specifically Hanafi or Shafi'i).
Foundations & Principles
Quran and Hadith foundations of the scholarly debate
The scholarly discourse rests on specific scriptural and jurisprudential sources that both sides invoke with different interpretive conclusions.
The foundational trade verse is Surah Al-Baqarah 2:275: "Allah has permitted trade and has forbidden riba (interest/usury)." This is the single most cited verse in the crypto debate. Pro-permissibility scholars — Abu-Bakar, the FCNA, Malaysia's SAC — cite the first clause to argue cryptocurrency trading constitutes lawful bay' (trade). Scholars ruling crypto haram argue the transactions more closely resemble riba or gambling than genuine trade.
The prohibition of riba draws on several verses: Al-Baqarah 2:275-281 (the comprehensive riba passage including the declaration of "war from Allah" against those who persist in riba), Ali 'Imran 3:130 ("do not consume usury, doubled and multiplied"), and Ar-Rum 30:39. These are applied to crypto staking, lending, and DeFi yield-farming mechanisms that generate interest-like returns. The FCNA ruled that "all the rulings of riba will apply to Bitcoins, as they do to fiat currencies."
Gharar (excessive uncertainty) draws primarily from Al-Baqarah 2:188 ("do not consume one another's wealth unjustly") and An-Nisa 4:29 ("do not consume one another's wealth unjustly but only in lawful business by mutual consent"). The Quran does not use the term "gharar" explicitly; the prohibition is established principally through hadith.
The prohibition of maysir (gambling) rests on Surah Al-Ma'idah 5:90-91: "O you who have believed, indeed intoxicants, gambling, [sacrificing on] stone altars, and divining arrows are but defilement from the work of Satan, so avoid it that you may be successful." Egypt's Grand Mufti, Indonesia's MUI, and Turkey's Diyanet all invoked this verse directly, arguing speculative crypto trading constitutes maysir.
Among hadith, the Six Commodities Hadith (Sahih Muslim 1587, narrated by 'Ubadah ibn al-Samit) is central: "Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, salt for salt — like for like, same for same, hand to hand. But if these commodities differ, then sell as you like, as long as it is hand to hand." If crypto is classified as currency analogous to gold and silver, then the rules of sarf (currency exchange) apply — requiring immediate, spot exchange with no deferment. The FCNA explicitly applied this, requiring Bitcoin exchanges to be "spot-trade at the current rate."
The gharar prohibition hadith (Sahih Muslim 1513, narrated by Abu Hurayrah) records that the Prophet ﷺ "forbade the transaction determined by throwing pebbles and the transaction involving gharar." Indonesia's MUI specifically cited this hadith when declaring crypto trading haram. Scholars differentiate between gharar fahish (major, invalidating uncertainty) and gharar yasir (minor, tolerable uncertainty); pro-crypto scholars argue crypto's uncertainty is comparable to legitimate commodity markets.
The hadith "leave that which makes you doubt for that which does not make you doubt" (Sunan al-Tirmidhi 2518) and the "halal and haram are clear" hadith (Bukhari 52, Muslim 1599) are invoked by cautious scholars to recommend prudence. The prohibition against selling what one does not possess (Sunan Abu Dawud 3503) makes crypto short-selling and unbacked futures unanimously impermissible.
The jurisprudential principles that shape the debate
Three Islamic legal maxims (qawa'id fiqhiyyah) dominate the permissibility argument and deserve particular attention for their centrality to the scholarly reasoning.
Al-Aṣl fi'l-Mu'āmalāt al-Ibāḥah
"The default in commercial transactions is permissibility"
This is the single most important principle in the pro-permissibility case. The FCNA built its entire ruling on this foundation: "The base ruling in Islam is that all matters pertaining to human relations are permissible unless proven otherwise... objections against Bitcoin are not strong enough to warrant a verdict of impermissibility; hence, they remain upon the default." Abu-Bakar invoked it identically. The principle places the burden of proof on those seeking prohibition, not on those asserting permissibility.
Al-'Ādah Muḥakkamah
"Custom has the force of law"
This is the principle through which pro-crypto scholars argue that widespread social acceptance transforms crypto into valid currency or property, even without government decree. Abu-Bakar argued the main Shariah criterion for money is "its acceptability by people — whether it comes about by forcing it upon people through laws, or through widespread voluntary acceptance." Mufti Faraz Adam applied the Hanafi concept that commodities become currency through ta'amul (common usage) and istilah (social agreement).
Lā Ḍarar wa lā Ḍirār
"No harm and no reciprocal harm"
Derived from the hadith recorded by Ibn Majah and Ahmad, this is the primary principle invoked by opposing scholars. Indonesia's MUI cited dharar (harm) as a core reason for prohibition, and the related maxim Dar' al-Mafāsid Muqaddam 'alā Jalb al-Maṣālih ("preventing harm takes precedence over securing benefits") is used to argue that even if crypto offers financial inclusion benefits, its harms outweigh them.
Conclusion
The Islamic scholarly consensus on cryptocurrency has not crystallized into a single position — and may not for years. But the trajectory is clear: the number and weight of credentialed scholars ruling crypto conditionally permissible has grown steadily since 2014, while several initially prohibitive bodies have built in conditional language allowing their rulings to evolve with regulation. The strongest pro-permissibility arguments share three features: they classify crypto as mal (property) through the Hanafi expanded definition via urf (custom); they invoke the default permissibility principle to place the burden of proof on prohibition; and they treat volatility, criminal use, and lack of government backing as external regulatory problems rather than intrinsic Shariah violations. The most consequential development is Malaysia's SAC ruling, which demonstrated that a state-level Shariah regulatory body could integrate crypto into its Islamic capital markets framework. The scholarly divide now falls less along the question of "is crypto inherently haram?" and more along "has crypto matured enough in regulation and usage to satisfy Islamic requirements for valid property and exchange?" — a question whose answer changes with each passing year.
References & Citations
Primary Sources, Fatwas, and Research Papers
- Abu-Bakar, Mufti Muhammad. (2018). Shariah Analysis of Bitcoin, Cryptocurrency, and Blockchain. Blossom Labs, Inc. Working Paper. (The landmark paper establishing Bitcoin as customary money via urf).
- Adam, Mufti Faraz. (2017). Bitcoin: Shariah Compliant? Amanah Finance Consultancy Ltd.
- Adam, M. F., & Barkatulla, A. K. (2018). Currency in Islamic Law: A Shari'ah analysis of bitcoin. In Fintech in Islamic Finance: Theory and Practice (Eds. Oseni, U. A., & Ali, S. N.). Routledge.
- Securities Commission Malaysia (SC) Shariah Advisory Council (SAC). (2020). Resolutions on Digital Assets from a Shariah Perspective. (Official regulatory classification of digital currencies and tokens as recognized assets / Mal).
- Fiqh Council of North America (FCNA). (2019). Islamic Economic Forum's Declaration on Bitcoin. (Position paper aligning with conditional permissibility).
- Dar al-Ifta al-Misriyyah. (2017). Fatwa on the Prohibition of Bitcoin Trading. (The foundational prohibitive fatwa citing Gharar, high risk, and lack of state backing).
- International Islamic Fiqh Academy (IIFA). (2019). Resolution No. 237 (8/24) on Electronic Currencies. (Detailed the categorization of digital assets into coins, altcoins, and tokens).
Shariah Rulings by Cryptocurrency Type
The cryptocurrency ecosystem is highly diverse. A blanket "Halal" or "Haram" ruling cannot apply to the entire market. Shariah compliance is strictly conditional upon the underlying mechanics, utility, and economic reality of each specific asset class.
1. Platform Coins & Smart Contracts
Permissible (Halal)
Overview: Unlike Bitcoin, which was designed purely as a digital currency, platform coins like Ethereum (ETH), Solana (SOL), and Cardano (ADA) act as the "fuel" or "gas" required to run decentralized applications and execute smart contracts on their respective networks.
Reasoning: Islamic regulatory bodies, most notably the Securities Commission Malaysia's Shariah Advisory Council (SAC), have officially listed coins like Ethereum, Solana, and Cardano as Shariah-compliant digital assets. They are recognized as Mal (valuable property) because they have intrinsic utility within their ecosystems (paying for network computation).
A smart contract is inherently neutral—it is simply programmable code. Its permissibility depends entirely on what the contract is executing. If a smart contract automates a standard sale or a Waqf (endowment), it is Halal. If it automates an interest-bearing loan, engaging with that specific contract is Haram.
2. Utility Tokens
Conditionally Permissible (Halal)
Overview: Utility tokens are created by companies or developers to grant users future access to a specific product, service, or ecosystem. They are similar to digital arcade tokens, API keys, or prepaid software licenses.
Reasoning: Islamic finance scholars generally view utility tokens through the lens of Manfa'ah (usufruct/utility) or as a forward lease/sale (Ijarah / Salam). Purchasing a token to access a service is considered a valid exchange.
The underlying project or service must be Halal. For example, a utility token used for decentralized cloud storage (like Filecoin) is Halal. However, a utility token used to access a decentralized casino or a prohibited gambling game is strictly Haram.
3. Security Tokens & RWAs
Highly Encouraged / Permissible
Overview: Security tokens and Real-World Assets (RWAs) are digital representations of ownership in a real-world asset, such as physical real estate, company equity, gold, or traditional financial instruments.
Reasoning: This category is widely championed by Islamic finance experts. It essentially mirrors traditional Islamic finance instruments like Sukuk (Islamic bonds) or tokenized equity. It perfectly aligns with the Islamic requirement that financial transactions must be backed by real, tangible assets to avoid Gharar (excessive uncertainty).
The physical asset being tokenized must be Shariah-compliant (e.g., you cannot tokenize a pork-processing plant or an interest-based bank). Furthermore, there must be strict legal frameworks proving that the token holder genuinely holds legal rights to the underlying asset.
4. Governance Tokens
Strictly Conditional
Overview: Governance tokens grant their holders voting rights to influence the direction, upgrades, and treasury management of a Decentralized Autonomous Organization (DAO) or protocol.
Reasoning: The permissibility of holding and voting with a governance token is entirely dependent on the nature of the DAO's business.
If the token governs a decentralized exchange (DEX) that facilitates spot trading of permissible assets, or an infrastructure protocol, holding the token is generally permissible.
If the governance token is for a Decentralized Finance (DeFi) lending protocol (such as Aave or Compound) that facilitates Riba (interest-based lending and borrowing), the token is Haram. Holding it means you are actively participating in, governing, and profiting from a Riba-based institution.
5. Non-Fungible Tokens (NFTs)
Conditionally Permissible (Halal)
Overview: NFTs are unique digital certificates recorded on a blockchain, used to prove ownership and authenticity of a specific digital or physical asset (such as digital art, collectibles, domain names, or official documents).
Reasoning: Scholars agree that NFTs can be recognized as valid digital assets (Mutaqawwam) provided they hold legitimate utility or artistic value. The underlying technology is simply a highly secure digital receipt.
The artwork or asset linked to the NFT must not contain illicit imagery or violate Islamic principles.
Many scholars caution against the hyper-speculative NFT market (e.g., buying a pixelated image for millions of dollars), classifying it as Israf (wastefulness) or Maysir (gambling/pure speculation without underlying value). NFTs used for gaming utility, digital identity, or ticketing are viewed much more favorably.
6. Staking (PoS) vs. Yield Farming
Halal (PoS) / Haram (Yield Farming)
Overview: The term "staking" is heavily overloaded in the crypto industry and requires careful Islamic distinction between securing a network and lending money.
Locking up your cryptocurrency (like ETH or ADA) directly with the network protocol to validate transactions and secure the blockchain is generally considered Permissible. Scholars view this as providing a necessary service to the network and receiving a legitimate reward or wage for your computational contribution (Ju'alah or Ijarah).
Taking your cryptocurrency and "staking" it into a Decentralized Finance (DeFi) liquidity pool to earn high interest yields from borrowers is strictly prohibited. This is textbook Riba (interest), regardless of whether the platform calls it "staking," "earning," or "yield farming."