In recent times and both, the Islamic finance sector as well as cryptocurrencies have been gaining a lot of attention. A lot of Australians who are using Islam finance are curious whether cryptocurrency is within the Sharia-approved finance category; Hejaz Financial Services weighs in.
Melbourne-based Halal home loan expert clarifies that Sharia laws have a stringent set of rules that govern the Halal financial industry that define the manner in which money can be spent, made or placed in.
The rules state that in the case of the currency of transactions, they must be in physical form and have an exact value. However, cryptocurrency doesn’t meet either of these criteria.
The reason for the rules is that transactions that don’t have a physical representation or have a certain value are characterized by uncertain, gambling and speculation. Furthermore trading in cryptocurrency often triggers activities that are prohibited by Sharia law, like gambling or other fraudulent activities.
Therefore, cryptocurrencies don’t conform to Sharia requirements as a type of currency. Yet, Sharia loans experts assert that cryptocurrencies can be considered a part of the Islamic financial market in the event that they are sold as a digital or commodity asset, so long as they comply with the requirements and provide clearly the benefits.
The use of cryptocurrency as a means of exchange was recently banned from Muslims in Indonesia which is a largely Islamic country by the country’s council of religious officials.
A majority of the people in Indonesia oppose this fatwa because the interest for investing in cryptocurrency is growing rapidly across Indonesia with more than 6.5 millions Indonesian residents having invested in cryptocurrency in May 2021.
Though some Islamic nations are in intense discussion over the merits and the risks of cryptocurrency, with some, including Indonesia prohibiting its use, that fatwas can be modified or reversed.