Answered by: Shaykh Shafiur Rahman
I have an important question and would appreciate Mufti answer, there is a company called Qoin
-it’s a digital currency that’s used between businesses
-the value increases by more businesses joining
-it has a cash-out option to turn into normal $au currency like cryptos
-currently valued at $7.74
-it fluctuates in small percentages based on the US dollar and businesses withdrawing which is the only way the value can go down
The issue that was brought up is on the open market people are still willing to sell it cheap for $2-$3 then the buyer can instantly go and purchase items from businesses at $7.74 so they can triple their money on the currency instantly by finding it cheap. A general concern for the buyer and seller if they could fall into riba
In the name of Allah, the Most Gracious, the Most Merciful
The riba (usury/interest) that is prohibited in Islam is of two general types. The first type is riba on loan contracts whereby person A lends to person B a sum of money with the condition of interest/excess over and above the original loan amount when repaying the loan. This is the primary type, its most common form and is prohibited by clear Quran verses.
Allah Most High says:
“Those who swallow usury cannot rise up save as he arises whom the devil has prostrated by (his) touch. That is because they say: Trade is just like usury; whereas Allah permitted trading and forbidden usury. He unto whom an admonition from his Lord comes, and (he) refrains (in obedience thereto), he shall keep (the profits of) that which is past, and his affair (henceforth) is with Allah. As for him who returns (to usury) – Such are rightful owners of the Fire. They will abide therein.
Allah has blighted usury and made charity fruitful. Allah loves not the impious and guilty.
Lo! those who believe and do good works and establish worship and pay the poor-due, their reward is with their Lord and there shall no fear come upon them neither shall they grieve.
O ye who believe! Observe your duty to Allah, and give up what remains (due to you) from usury, if ye are (in truth) believers.
And if ye do not, then be warned of war (against you) from Allah and His Messenger. And if ye repent, then ye have your principal (without interest). Wrong not, and ye shall not be wronged.” [Qur’an, 2.275-279]
The second type is connected to sale or exchange contracts when people exchange commodities of the same type, i.e. gold for gold, silver for silver or dates for dates (6 items mentioned in the Hadith). These must be exchanged like for like on the spot/immediately to avoid the possibility of riba due to excess volume/weight or due to a deferred exchange from one of the parties.
If two people exchange the same commodity but in unequal amounts, the extra would be riba. This type of Riba is also called Riba al-Hadith in the literature of scholars because it is not directly mentioned by the Quran. The Prophet (ﷺ) has classified it as riba in the following hadith:
“Gold for gold, silver for silver, wheat for wheat, barley for barley, date for date, salt for salt, must be equal on both sides and hand to hand, whoever pays more or demands more (on either side) indulges in Riba” [Sahih Muslim].
In this case, you are exchanging one currency ($AU) for a digital token/’currency’/’asset’called Quon. Based on the information you have given it could be argued that the Qoin is not a real currency as it does not have universal acceptance in Australia and that it is limited to a particular platform. Therefore it resembles a type of digital asset or medium of exchange that has value due to the fact that you can buy goods on their platform. In sharia, anything that is not prohibited by sharia and has value can be used as a medium of exchange. If people offer you more value on the platform then that is fine as well.
If that is the case then there would be no riba here as you are exchanging currency for an asset or another medium of exchange.
The answer supplied here is only in respect of your specific question on whether purchasing Qoin would involve riba. The question of whether Qoin as a product or its platform and the detailed mechanics of how it operates is sharia-compliant or not is a separate issue that would require a thorough study of the product and contact details of the platform and how it is configured.
Only Allah knows best
Written by Shaykh Shafiur Rahman
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham