[Q 211] Why is cryptocurrency considered impermissible?

Question

Why is cryptocurrenc considered impermissible?

بسم الله الرحمن الرحيم

الجواب بعون الملك الوهاب اللهم هداية الحق والصواب

Answer

Cryptocurrency is a digital currency, and trading in digital currency is impermissible in Islamic law. The reason for this is that it involves gharar (uncertainty), since its guarantee is not with anyone, it is not known when it might be discontinued, resulting in investors losing their money.

And the blessed Hadith prohibits trading in anything that involves gharar. Therefore, trading in cryptocurrency is also deemed impermissible.

The Hadith states, narrated by Abu Hurairah:

“عن أبي هريرة: أن النبي صلى اللہ عليه وسلم نهى عن بيع الغرر“

Translation:

The Prophet ﷺ forbade sales involving gharar (uncertainty).

(Sunan Abi Dawud, The Book on Sales, vol 3, p 254, Hadith 3376, Beirut)

Furthermore, in Mirqat al-Mafatih it states:

“أي ما لا يعلم عاقبته من الخطر الذي لا يدرى أيكون أم لا كبيع الآبق والطير في الهواء والسمك في الماء والغائب المجهول“

Translation:

(And prohibited sale involving gharar) Meaning the sale of that thing is prohibited whose outcome is not known due to the risk that it is not known whether it will be found or not.For example: sale of a runaway slave, sale of birds in the air, sale of fish in water, sale of absent unknown thing.

(Mirqat al-Mafatih Sharh Mishkat al-Masabih, The Book on Sales, vol 5, p 1934, Dar al-Fikr, Beirut)

Answered by: Asif Raza Madani (Askmufti Scholar)

Verified by: Mufti Sajid Attari

Translated by: Shaheer Attari