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Investing in Cryptocurrency

Answered as per Hanafi Fiqh by ShariahBoard.org

Assalamualaikum warahmatullah

My question is about investing in digital or cryptocurrency, which offers a fixed amount of its coins for locking the original investment for a period of 6 months. As an example:

  • We buy a package for 1200$ which gives us 120 coins at the price of 10$ each at the time of purchase
  • The company will hold that package of 120 coins for 6 months and in return they will give a monthly mining shares of 4% i.e. 4.8 coins each month for 6 months
  • At the end of the 6 month locking period, we will be able to collect back the initial investment as well as monthly mining shares
  • We will be able to sell them all at an expected high or appreciated rate in the market

The fundamental condition is that the original number of invested coins cannot be sold until the 6 months locking period is completed. However, the monthly mining shares received each month are not locked and can be sold at the current market price each month.

Please note that although the amount of the awarded coins are fixed (i.e. 4%) but the value of those coins are not fixed or constant and continuously fluctuating in each second. The fluctuation can be appreciation or depreciation both (gain or loss) due to demand and supply factors. As an example, the current month’s mining shares of 4.8 coins may have a rate of 12$/coin but come next month its rate might be 8$/coin and in the third month it might become 15$ and so on. In other words, the rate of the coins at the back end is continuously fluctuating despite the fact that one gets awarded a fixed quantity of coins each month.

Thus, the value of both the original investment as well as monthly mining shares are continuously fluctuating on the basis of demand and supply factors and there is an equal chance of the price going up or coming down.

Note: Digital or Cryptocurrency does not have a physical existence rather these are considered virtual currencies and are stored into some electronic wallets just like bitcoin.

Please analyze the above-mentioned scenario and provide guidance in accordance with the teachings of the Islamic Shari‘ah.

JazakAllahu Khaira

Walaikumassalam Warahmatullahi Wabarakatuhu

الجواب و باللہ التوفیق

Regarding this issue, please review this fatwah in light of the fatawah issued from Darululoom Deoband and Jamia Uloom al-Islamiyah Binnori Town with significant variation.

Bitcoin or any other digital currencies are just imaginary currencies. They does not exhibit the fundamental qualities and conditions of real currencies, at all. And these days the trade adopted with such currencies over the internet and web applications, does not really involve any mabie‘ (actual buying and selling), neither does it fulfill the basic Shar‘ai conditions for the provision of bay‘. Instead, in reality, it is a form of interest and gambling which is based on an ambiguous transaction and fraud. Therefore, the businesses running in form of buying and selling of bitcoins or any digital currencies on the internet are not Halal (i.e. impermissible) in light of the Islamic Shari‘ah and it is also impermissible to invest money in them.

(Extracted from: Darul-Ifta Darululoom Deoband, Fatwa#: 155068 and 155275, October 12th 2017 & Jamia Uloom Islamiyah Binnori Town Karachi, Rajab al-Murajjab, 1438 Hijri)

قال اللہ تعالی:وأحل اللہ البیع وحرم الربا الآیة (البقرة: ۲۷۵)

،یٰأیھا الذین آمنوا إنما الخمر والمیسر والأنصاب والأزلام رجس من عمل الشیطن فاجتنبوہ لعلکم تفلحون(المائدة، ۹۰)

وقال اللہ تعالی :ولا تعاونوا علی الإثم والعدوان (سورة المائدة، رقم الآیة: ۲)

وقال رسول اللہ صلی اللہ علیہ وسلم:إن اللہ حرم علی أمتي الخمر والمیسر(المسند للإمام أحمد،۲: ۳۵۱، رقم الحدیث: ۶۵۱۱)،

﴿وَلَا تَأْکُلُوْا أَمْوَالَکُمْ بَیْنَکُمْ بِالْبَاطِلِ﴾ أي بالحرام، یعني بالربا، والقمار، والغصب والسرقة (معالم التنزیل ۲: ۵۰)

، لأن القمار من القمر الذي یزداد تارةً وینقص أخریٰ۔ وسمی القمار قمارًا؛ لأن کل واحد من المقامرین ممن یجوز أن یذہب مالہ إلی صاحبہ، ویجوز أن یستفید مال صاحبہ، وہو حرام بالنص

(رد المحتار، کتاب الحظر والإباحة،باب الاستبراء، فصل في البیع، ۹: ۵۷۷، ط: مکتبة زکریا دیوبند)

فقط واللہ اعلم بالصواب

This answer was collected from Shariahboard.org. It was established under the supervision of the eminent faqih of our era, Hazrat Shah Mufti Mohammed Navalur Rahman damat barakatuhum.

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