Is Crypto Halal or Haram? A Study in Light of the Classical Imams and Modern Fatwas
Not long ago, the word “Bitcoin” was heard only among technology experts. Today it has reached every street corner. One person tells stories of becoming rich overnight, while another mourns the loss of his life savings. Amid all this noise, the most important question for a sincere Muslim is not about profit or loss. It is this: is crypto halal or haram? This question cannot be settled by emotion or hearsay. We first need to understand what cryptocurrency actually is. Then we need to see what principles the classical imams laid down about wealth, currency and trade. Finally, we need to look at how scholars today have applied those principles to this new phenomenon.
What Is Cryptocurrency?
Cryptocurrency is a digital unit that exists only within a special computer system called a “blockchain”. A blockchain is a shared ledger that records every transaction, kept secure not by a single bank or government but by a network of computers spread across the world. There is no gold behind it and no government guarantee. Its price is set entirely by supply and demand, which is why its value can swing so dramatically.
The world of crypto is not one thing but many. It includes core coins like Bitcoin, “stablecoins” whose value is tied to a currency such as the US dollar, and countless “tokens” linked to particular projects or services. The ways of trading them also vary: simple buying and selling, trading with borrowed money (leverage), futures and other derivatives. Keeping this variety in mind matters, because the Islamic ruling depends heavily on exactly which asset and which method we are talking about.
The Real Fiqh Question: Three Core Issues
To find the Islamic ruling on anything new, jurists first classify it, deciding which known legal category it belongs to. In the case of cryptocurrency, the discussion turns on three questions:
- Is cryptocurrency “mal” (wealth or property) in Islamic law?
- If it is wealth, can it serve as currency, or “thaman” (a medium of price)?
- Does trading it involve “gharar” (excessive uncertainty) or “qimar” (gambling)?
The answers to all three lie in principles set out by the classical imams. Where scholars differ is in how to apply those principles to something new.
How the Classical Imams Defined Wealth
The Hanafi View
The well known Hanafi definition of wealth is recorded by Allamah Ibn Abidin al Shami in his work Radd al Muhtar:
الْمُرَادُ بِالْمَالِ مَا يَمِيلُ إِلَيْهِ الطَّبْعُ وَيُمْكِنُ ادِّخَارُهُ لِوَقْتِ الْحَاجَةِ
What is meant by wealth is that which human nature inclines towards and which can be stored for a time of need.
In the same discussion, another principle is stated: something becomes wealth when people treat it as wealth, and it gains legal value when the Sharia permits benefiting from it:
وَالْمَالِيَّةُ إِنَّمَا تَثْبُتُ بِتَمَوُّلِ النَّاسِ كَافَّةً أَوْ بَعْضِهِمْ، وَالتَّقَوُّمُ يَثْبُتُ بِهَا وَبِإِبَاحَةِ الِانْتِفَاعِ بِهِ شَرْعًا
The status of wealth is established only when all people, or some of them, treat it as wealth, and legal value is established through this together with the Sharia permitting benefit from it.
This is where the first major disagreement about cryptocurrency begins. One group argues that there is nothing real behind cryptocurrency, that it is simply a set of numbers recorded in a computer ledger, and so it does not meet the definition of wealth. The other group argues that millions of people value it, trade it and store it, so the condition that “people treat it as wealth” is clearly met.
The View of the Majority of Jurists
A statement of Imam al Shafi’i is reported by Imam Jalal al Din al Suyuti in his work al Ashbah wa al Naza’ir:
لَا يَقَعُ اسْمُ مَالٍ إِلَّا عَلَى مَا لَهُ قِيمَةٌ يُبَاعُ بِهَا، وَتَلْزَمُ مُتْلِفَهُ وَإِنْ قَلَّتْ
The word wealth applies only to that which has a value for which it can be sold, and for which whoever destroys it must
pay compensation, even if that value is small.
This definition focuses on market value and liability for damage rather than physical existence. That is why the majority of jurists counted benefits and rights as wealth, while the Hanafis generally look for something that can be physically stored. Scholars who accept cryptocurrency as wealth mostly draw on this broader definition.
Currency: Nature or Custom?
The second question is whether something can become currency simply because people accept it. Two statements from the classical imams are especially relevant here. Imam Malik is reported in al Mudawwanah as saying:
وَلَوْ أَنَّ النَّاسَ أَجَازُوا بَيْنَهُمُ الْجُلُودَ حَتَّى تَكُونَ لَهَا سِكَّةٌ وَعَيْنٌ، لَكَرِهْتُهَا أَنْ تُبَاعَ بِالذَّهَبِ وَالْوَرِقِ نَظِرَةً
If people were to adopt leather among themselves (as currency) until it became coinage and cash, I would dislike it being sold for gold and silver on deferred terms.
In other words, for Imam Malik, even leather, once it becomes currency by custom, takes on the rulings of currency. Similarly, Shaykh al Islam Ibn Taymiyyah wrote in Majmu al Fatawa:
وَأَمَّا الدِّرْهَمُ وَالدِّينَارُ فَمَا يُعْرَفُ لَهُ حَدٌّ طَبْعِيٌّ وَلَا شَرْعِيٌّ، بَلْ مَرْجِعُهُ إِلَى الْعَادَةِ وَالِاصْطِلَاحِ
As for the dirham and the dinar, there is no known natural or legal definition for them. Rather, they go back to custom and convention.
These statements show that in Islamic law, currency rests on custom, not on the inherent nature of an object. Scholars who permit cryptocurrency draw on this principle. Those who disagree respond that the custom that counts must be widespread, stable and under some responsible authority. Cryptocurrency, they argue, is neither a recognised state currency nor stable in value, and stability is a basic feature of money.
Gharar and Gambling: The Third Question
The third question concerns the way cryptocurrency is traded more than the asset itself. The Sharia specifically forbids two things in trade. The first is gharar. Abu Hurayrah (may Allah be pleased with him) reported that the Messenger of Allah, Muhammad صَلَّى اللهُ عَلَيْهِ وَعَلَى آلِهِ وَسَلَّمَ, forbade deceptive sales: "نَهَى رَسُولُ اللَّهِ صَلَّى اللَّهُ عَلَيْهِ وَسَلَّمَ عَنْ بَيْعِ الْحَصَاةِ، وَعَنْ بَيْعِ الْغَرَرِ", the Messenger of Allah forbade the pebble sale and the sale involving gharar (Sahih Muslim, Book of Transactions, Hadith 1513). The second is gambling, which the Quran calls an act of Satan:
يَا أَيُّهَا الَّذِينَ آمَنُوا إِنَّمَا الْخَمْرُ وَالْمَيْسِرُ وَالْأَنصَابُ وَالْأَزْلَامُ رِجْسٌ مِّنْ عَمَلِ الشَّيْطَانِ فَاجْتَنِبُوهُ لَعَلَّكُمْ تُفْلِحُونَ (Surah Al Ma’idah 5:90)
O you who believe, intoxicants, gambling, idols and divining arrows are filth from the work of Satan, so avoid them so
that you may succeed.
Alongside this, a general Quranic principle should be kept in view: "لَا تَأْكُلُوا أَمْوَالَكُم بَيْنَكُم بِالْبَاطِلِ إِلَّا أَن تَكُونَ تِجَارَةً عَن تَرَاضٍ مِّنكُمْ" (Surah An Nisa 4:29), do not consume one another’s wealth unjustly, except through trade by mutual consent.
Much of the activity common in the crypto world today looks less like real trade and more like betting on prices. Buying and selling within hours, making deals ten or a hundred times larger than your capital using borrowed money, and buying tokens with no real project or identifiable party behind them are all cases where the elements of gharar and gambling are plain to see.
Modern Fatwas: The Position of Prohibition
Mufti Muhammad Taqi Usmani’s Fatwa (June 2026)
The most recent and prominent fatwa on this subject in Pakistan came from Jamia Darul Uloom Karachi. On 10 June 2026 (24 Dhul Hijjah 1447 AH), its fatwa department issued a ruling signed by Mufti Muhammad Taqi Usmani, President of Wifaq ul Madaris Al Arabia Pakistan and of Darul Uloom Karachi, along with five other scholars. The fatwa covers cryptocurrencies, crypto tokens and stablecoins alike. Its central conclusion is that cryptocurrencies do not meet the Islamic legal definition of wealth or property.
The fatwa describes cryptocurrency as nothing more than an entry of imaginary numbers in an account. Mufti Taqi Usmani is reported to have explained that, based on Shariah principles, buying and selling cryptocurrency, crypto tokens and stablecoins is not permissible, because they do not hold the status of wealth or of an asset that can be owned. He added that changing the name of something does not change its true nature or its ruling.
An important development followed. On 11 July 2026, the Chairman of the Pakistan Virtual Assets Regulatory Authority (PVARA), Bilal bin Saqib, met Mufti Taqi Usmani. The authority asked that blockchain technology, tokens backed by real assets, and stablecoins be assessed separately from speculative crypto trading. This shows that the discussion is still ongoing, and that the door remains open for further scholarly reflection, especially on digital assets backed by something real.
Bodies in Other Countries
Several official religious bodies outside Pakistan have also ruled cryptocurrency impermissible. Egypt’s Dar al Ifta, in a statement published at the start of 2018, declared trading and dealing in Bitcoin haram. Its reasoning was that the extreme price swings of Bitcoin and the absence of any real backing create an environment of deception and uncertainty, which Islamic law forbids.
The fatwa of the Indonesian Council of Ulama (MUI), issued in November 2021, is more detailed. It ruled cryptocurrency impermissible as a currency, citing uncertainty, harm and Indonesian regulations. It also rejected trading digital commodities that do not meet its stated requirements. A third provision, however, allows a crypto commodity that meets the required criteria, has an underlying basis and offers a clear benefit. The document does not state that Bitcoin automatically qualifies for this exception.
Modern Fatwas: The Position of Permissibility
On the other side, a group of scholars considers cryptocurrency permissible under certain conditions. A leading voice for this view is Mufti Faraz Adam of the United Kingdom, a researcher in Islamic finance and financial technology. This group argues that Bitcoin meets the definition of wealth and can be treated as a digital commodity. Mufti Muhammad Abu Bakar and Darul Uloom Zakariyya are also reported to support this view.
The legal basis for this position is the same principle of custom seen above in the statements of Imam Malik and Ibn Taymiyyah. Mufti Abu Bakar is reported to have said that jurists of all four schools agree that when something becomes valuable through people’s custom and acceptance, it counts as wealth. Mufti Faraz Adam has argued that a system accepted among people is enough to establish a currency in the Sharia.
An official body also represents this approach. In 2020, the Shariah Advisory Council of Malaysia’s Securities Commission recognised regulated digital assets as permissible property.
It is especially worth noting that even the scholars who permit crypto do not permit every kind of crypto trading. They are equally clear that leverage and speculative derivatives fall outside the bounds of Islamic law. In Mufti Faraz Adam’s Shariah assessments, lending platforms such as Aave and Compound were ruled non compliant because they are based on interest bearing loans.
A Scholarly Assessment of Both Positions
The strongest point made by those who prohibit crypto is that, in the Sharia, the idea of wealth is tied to something real, a benefit, or a right, and cryptocurrency has no such thing behind it. Its price depends only on the expectation that someone else will buy it tomorrow at a higher price, and that comes very close to gambling. Its extreme volatility, the countless cases of fraud and the absence of any responsible authority also call for caution under the principle of “sadd al dhara’i” (blocking the means to harm).
The strongest point made by those who permit it is that the imams based currency and wealth on custom, and custom changes over time. Today, paper money also circulates without any gold behind it, purely on the basis of trust and law, and scholars gradually came to accept it. For them, the real issue is not the asset but how it is used. If a transaction is free of interest, gambling and deception, being new does not make something haram.
At the heart of the disagreement is one question: can digital numbers be recognised as “wealth”? This is a matter of scholarly reasoning, and qualified scholars have reached different conclusions. Presenting any single view as the agreed position of the whole Ummah would go against scholarly honesty.
Where Do Scholars Agree?
Despite their differences, both groups appear to agree on certain points, and these matter most for ordinary Muslims:
- Leverage and derivatives: Trading large positions with borrowed money, futures and similar products are impermissible in the view of both groups.
- Interest based platforms: Lending crypto on interest, or placing it in systems that pay returns based on interest, is impermissible.
- Gambling style trading: Buying and selling moment by moment with the aim of betting on price movements comes close to gambling.
- Suspicious tokens: Buying tokens with no real project or identifiable party behind them is clear gharar.
In other words, for those who are busy with leverage, futures and get rich quick schemes in the name of “crypto trading”, even the scholars who permit crypto offer no room.
What Should an Ordinary Muslim Do?
On an issue where qualified scholars differ, the right path for an ordinary Muslim is to follow the guidance of a reliable scholar or institution whose knowledge and piety he trusts, and to avoid hunting for whichever opinion suits his wishes. A person who picks the easier opinion only because it opens the door to profit is not following the Sharia. He is following his own desires.
It is also worth remembering that the question of halal income is more delicate than most matters. Where there is real doubt between halal and haram, caution is what taqwa calls for. The Messenger of Allah صَلَّى اللهُ عَلَيْهِ وَعَلَى آلِهِ وَسَلَّمَ described avoiding doubtful matters as a way of protecting one’s religion and honour (Sahih al Bukhari, Book of Faith, Hadith 52; Sahih Muslim, Book of Musaqah, Hadith 1599). Anyone who has already invested in crypto should present his specific situation to a qualified mufti for guidance, because the ruling also depends on what he invested in and how.
A Final Word
The cryptocurrency question is a clear example of how Islamic law meets new questions in the light of old principles. Imam Malik once raised a hypothetical question about leather becoming currency. Today, the same question stands before us in the form of digital numbers. The principles of the imams are clear: wealth is what people value and what the Sharia permits benefiting from, and trade is what remains free of deception, gambling and interest. The disagreement lies only in applying these principles to something new, and that disagreement is not yet settled. But one thing is certain in every case. Any business built on chance, borrowed money and dreams of overnight riches does not fall within the trade the Quran describes as "تِجَارَةً عَن تَرَاضٍ", trade by mutual consent.
