Is Crypto Halal or Haram? A Guide for Muslims

Last updated on August 6th, 2023 at 09:04 am


What is Halal?

Any business, action, or food that is permissible in Islam is known as Halal. To describe a business as Halal means that Muslims can engage in it. Such businesses are not forbidden (Haram). Haram is the opposite of Halal.

Meaning of Haram

Haram is the opposite of halal. Anything that is unlawful and prohibited and Muslims are admonished to steer clear of is known as “haram”. Both words are Arabic words.

The debate about whether Muslims can invest in cryptocurrency or not has been raging since digital coins became popular a few years ago.


In this article, we take an Islamic perspective look at what the Holy Quran says about what Muslims can invest in and what they can not, and whether Muslims can invest in Bitcoin or other forms of cryptocurrencies.

Difference between Halal and Haram?

In Islam, actions or behaviour or foods that are allowed and permissible for the faithful are referred to as “Halal.

Haram is the opposite of halal. Anything that is unlawful and prohibited and Muslims are admonished to steer clear of is known as “haram”. Both words are Arabic words.

But the applications of the Arabic words have been extended to discussions around crypto assets in Islam whether trading in cryptocurrency is halal (permissible) or haram (not permissible). Islamic clerics around the world have different opinions regarding the use of crypto.

There has been an impressive technological and digital revolution in recent decades, and there has been an influx of innovative payment systems.

Cryptocurrency in particular is growing in popularity and usage, serving personal and business purposes around the world.

Currently, there are several cryptocurrencies out there, and more will likely come in the coming days. Nevertheless, Bitcoin remains a frontier, as the coin was the very first of its kind to go mainstream.

However, Muslims, in an attempt to ensure the uprightness of their conduct before Allah, are trying to determine if the adoption of cryptocurrency is consistent with their belief and if it’s permissible under Islamic laws.

There are two popular Islamic views about crypto:

  • Shariah expert who supports crypto
  • Islamic experts who oppose crypto-related investment

Those who support investing in crypto

There have been different things stated by different sources from the Islamic world. While some are supporting that the adoption of cryptocurrency is halal, others have been arguing that it is not permissible under sharia law.

A popular and well-detailed interpretation on this issue was given by Sharia advisor Mufti Muhammad Abu-Bakar.

He stated his case, years back, in support of crypto of course (he’s an expert in the finance world), and was able to influence many Muslims to invest in bitcoin.

While making his case, he didn’t shy away from the fact that crypto is speculative, but he reminded his audience that all currencies (including the likes of the US dollar and Euros) also have a speculative element.

He said that the value of any currency like the US dollar, Pound, or Euro could rise and drop at any time (and they actually do).

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Hence, along this path, he insisted that trading in bitcoin and other crypto-assets is not haram, and is permissible under Shariah law.

Additionally, there are other Muslim scholars that have been insisting that cryptocurrency is permissible under sharia law

It is well known that religion forbids anti-interest financial activities. Hence, since the operations of cryptocurrency don’t inherently promote this, different Islamic scholars embraced this as halal.

An average Muslim depends on rulings and interpretations granted by well known Islamic scholars before taking certain steps, so as to be sure they won’t contradict sharia law.

And after several Islamic scholars pronounced blockchain technology as being cool in line with Islamic Sharia law and halal, many Muslims could take steps towards crypto investments.

In fact, due to these things, there are mosques in London that decided to accept cryptocurrency donations from the Muslim faithful.

Those who oppose investing in crypto

Another expert on the subject who considered this from a perspective of contract regulations insisted that there has to be something for consideration, and he explained how crypto passed this test since it is something tangible that came with commercial value.

He was of the opinion that cryptocurrencies are genuine and tangible digital assets. And since these digital coins can be possessed and commercially traded, then all is okay, and it’s not against the shariah.

However, there are also several Islamic experts who are against the use of cryptocurrencies. In fact, a country like Indonesia has decided to subscribe to the ruling of its national council of Islamic scholars and shut the door against the usage of crypto in their territory.

It should be noted that before this, there are already numerous crypto investors in the country. It was made known that social media has also contributed greatly to the popularity of cryptocurrency among young folks in Indonesia.

But despite that there are certain other religious bodies in Indonesia fighting against the ruling of the Islamic council against crypto, the country’s quasi-governmental Ulama Council declared it is against shariah, explaining that crypto doesn’t have a physical form and definite value.

In fact, a prominent Islamic expert in the country stated empathically that it doesn’t meet the requirement according to shariah principles, and it can be harmful if used.

He belongs to the Nahdlatul Ulama (NU), whose rulings are respected in the country, and they have a lot of members.

Nevertheless, there have been times when these Islamic authorities have been criticized for the appropriateness of their Shariah rulings. While they served as an authority on Shariah compliance in the country, not all they say are widely embraced.

And while they have issued a fatwa declaring cryptocurrencies haram in Indonesia, the head of the Islamic council has stated that it could be traded as a commodity or digital assets if they meet their requirements.

Just as several crypto Islamic critics would say, the Indonesian council announced that their decision was precipitated upon the results from a discussion of issues on Islamic jurisprudence (which was attended by several experts).

And they concluded that cryptocurrency trading tends to involve illegal practices as well as gambling (which are things that are haram).

For them, crypto is not just used for dirty things like gambling, but the coins themselves are synonymous with gambling since investors speculate about the value without really knowing the reason behind it.

All of these point to something similar you will always find amidst crypto critics – how they are easily used for illegal activities, as well as how their values isn’t stable.

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For those criticizing from an Islamic standpoint, they will be quick to highlight how the religion frowns at gambling, and how the unstable value could cause harm to the investor eventually.

Nevertheless, the point remains that since many Islamic financial experts are satisfied with stocks, then they shouldn’t have issue with crypto trading too (although some would argue that the value of stocks are determined by the company’s performance, and is thus different from crypto).

But then, many Islamic experts on this matter have been able to demonstrate that crypto is Shariah compliance. Hence, blockchain technology is getting legitimacy across the Islamic finance world.

Therefore, while there are still many antagonists against blockchain technology, there remain several innovative agencies from the Islamic world pushing for wider acceptance of things like cryptocurrencies, as experts add further legitimacy to the rulings that investing is halal and cool.

Cryptocurrency Investments And Illegal Activities

As noted already, one of the major things critics of crypto won’t stop talking about is that these digital coins are usually used for illegal activities.

Since cryptocurrency allows anonymity and is untraceable, many illegal activities are being done with it – including terrorism and gambling.

Its decentralized nature is one prominent reason many governments around the world are against its existence. Hence, very few central banks are ready to support crypto.

Therefore, a lot of critics believe people should have nothing to do with cryptocurrencies because it is not legal tender (and because it is not supported by relevant authorities).

Therefore, they are insisting it is merely speculated trading, as the value of many cryptocurrencies is not assigned by a major central authority.

Nevertheless, it must be noted that certain Islamic experts have made it known that something can be deemed halal while the possessor must not use it for negative things.

Taking our attention away from crypto temporarily, we know that there are actually many good items people usually use for unlawful things.

It is wrong then to condemn those things on the spot just because some set of people decided to neglect the positive ways they could be utilized, and were approaching it in a negative way.

Coming back to crypto, we should note that ownership of a digital coin is with the owner of such a coin, and it is stored in a digital wallet. Therefore, whatever the owner decides to do with it is up to them.

Since the digital coin is like the popular currency people spend, there is nothing wrong with it in itself, and they have control over how they want to go about the usage of the coins.

The person decides to use his or her digital coins as they deemed fit, just as they do with their paper currency. And it should also be noted that paper currencies are being used for illegal activities by mischievous people too.

Crypto As a Medium Of Exchange

Even while we criticize cryptocurrency, we can’t ignore its evident advantages and benefits too, which are visible in different places in the world.

These digital coins are being embraced as a medium of exchange in different parts of the world. There are even popular companies that are now receiving payment for their products and services in cryptocurrencies.

Indeed, although we can’t ignore the fact that the value of popular cryptocurrencies like Bitcoin can rise or drop in value at any point in time, the fact is, many have embraced them as a viable medium of exchange, and they seemed to appreciate these digital coins than usual traditional currencies.

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These are not abnormal situations, because by utilizing crypto, anyone can easily move or receive a huge amount of money without the traditional issues attached to the traditional financial system.

Many Muslims are getting careful about missing out on something remarkable like blockchain technology just because of a wrong misinterpretation somewhere.

Investing in cryptocurrency is one of the ethical investments that should be recommended to Muslims since it is actually not against shariah principles.

There are currently several big banks around the globe that are now recognizing crypto as a viable medium of exchange, and these financial giants won’t indulge in some project which is dirty in themselves.

This should make us realise that crypto can be used by anyone without having to feel bad about themselves. They can trade, buy and sell these digital coins.


Crypto is empowered by the phenomenal blockchain technology, which was brilliantly built to encourage decentralization and discourage control by a centralized authority.

An offshoot of the progress of technology, it is difficult and impossible to cheat or hack the blockchain platform.

It promotes accountability and openness, and it eradicates the need for centralized financial institutions (or any other organization) that should enforce control.

Many Muslims are on the lookout for proof that even cryptocurrencies are not going against shariah law, as the religion has financial principles to which its adherents are required to adhere strictly to.

These investment opportunities must be regarded as halal before the Muslim is expected to invest in such.

This means, such an investment medium must be vividly checked by relevant Islamic stakeholders, and they can give others the go-ahead if they discovered it met certain criteria.

This is regarded as being of great importance to many Muslims, as they are of the opinion that the well-known principles of Shariah law should be applied to current financial systems too.

Therefore, since blockchain technology is a recent technology, it is a discussion many Islamic experts have been having.

They have been critically looking into its features and stating their different opinions. Shariah principles can be applied to modern crypto analysis as they are based on social justice, accountability and ethics which transcend all forms of financial transactions.

As long as a Muslim doesn’t use cryptocurrency for illegal activity, then trading or investing in crypto assets should not be deemed to be contrary to Shariah principles.

The fact remains that many Islamic scholars still see nothing wrong with using cryptocurrencies. Blockchain technology is however not something bad, although the person using it will determine if it will be used for good purposes or otherwise.

Nevertheless, it promotes lovely and positive things like ethics and accountability. Since these are some of the things shariah law is interested in establishing, it means Muslims could use cryptocurrencies too.


Like everyone else, Muslims should use these digital coins for positive and legal things. It is halal when a person invests in cryptocurrency on a legal platform and with a legal motive. This is not contrary to shariah principles.


  • Opeyemi Quadri

    Ope is a finance writer and researcher with 10+ years of experience in content creation. His interests cut across decentralized finance, investment, foreign exchange, government policies and politics.

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