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Below, please find the summary of the Islamic Economic Forum’s Declaration on Bitcoin:
Islamic Economic Forum (IEF) is a specialized group on WhatsApp founded by Sheikh Muhammed Khalid Hasani from Pakistan. The group includes Shariah Scholars, experts, practitioners, economists, academics, researchers, consultants, auditors, and regulators. The different academic institutions and regulatory bodies of the Islamic financial industry such as AAOIFI, CIBAFI, IFSB, INCEIF, ISRA, and the central Shariah Boards of various countries are represented in this forum.
Summary of the declaration:
The scholars have two different opinions. The first is permissibility, while the second is prohibition. The basis of both views is detailed in the following paragraphs, in addition to the consequences of each view
on financial transactions in practice.
First view: Permissibility
Scholars who are of this view consider that the criteria of mal, money, and
thamaniyyah (monetary usage) is ascertained in Bitcoin, they build their view
on the following:
1. Adhering to the legal maxim that says: “original rule is permissibility in financial transactions .”
2. Bitcoin is considered mal mutaqawwum (valuable property or asset recognized by the Shariah) that has legal value by virtue of the fact that in practice, it is exchanged for other currencies, goods, and services.
3. Bitcoin plays the functions of money or currencies in general, although not issued by a government authority. Besides, there is no economic or Shariah limit for currency to prevent that.
Discussion of the objections of this first view:
One of the objections to the first view is that Bitcoin is exposed to wild fluctuations, a large number of speculations, and illegal uses, however, this objection is discussed and defeated as the following :
– The volatility in the prices of Bitcoin, and then the relative instability in its value, affects the efficiency, as is the case of many contemporary currencies and equity, but does not affect its Thamaniyya (monetary value).
– The illegal uses of Bitcoin are contingent and do not affect the general Shariah rule, as many contemporary currencies are vulnerable, they are at risk of fraud as well. On the other hand, these illegal uses are reversible according to the studies referred to in this declaration.
– The ignorance of the issuer, as well as the absence of regulators and government control authority has no impact on the general Shariah rule; because all the rules of Bitcoin are publicly stated, and well-known to all players and customers through the applications of Bitcoin–Blockchain. The progress of the work in this field does not create salient features to form a firm Shariah rule in this regard. On the other side, the trust from a government backing in a currency is replaced here with blockchain technology which establishes trust in itself.
Therefore, according to the first view:
– It is permissible to be engaged in verifying and mining for the purpose of obtaining the units of Bitcoin, whether through possessing hardware and software directly or renting through the purchase of cards that authorize the use of a third party’s hardware. However, the Shariah rules of investment in mining through an E-wallet or authorizing the third party should be studied in each case on its own merits.
– It is permissible to exchange Bitcoin for other currencies, as well as accept them as a counter value in commodity transactions, furthermore it could be exchanged for other cryptocurrencies that are considered permissible.
– Exchanging Bitcoin with other currencies or with gold and silver is all regulated by the Shariah exchange rules (bai al sarf). It is worth mentioning that each cryptocurrency is considered a separate type of currency as is the case in a fiat currency. In addition, the accumulated Bitcoins are subject to the rules of zakat on gold and silver.
Second view: Bitcoin is Prohibited
This view is based on the following:
1. The ignorance of the issuer.
2. The ignorance of the future of Bitcoin.
3. The absence of the issuing authority or the guarantor of issuing.
4. The absence of government regulation and supervision.
5. A large number of speculations and relative instability of its value.
6. The large number of illegal uses.
7. According to the aforementioned elements, Bitcoin is not mal mutaqawwum
with legal value.
In fact, all these bases, which are mentioned in the discussions of the features
that affect Shariah rule, could be classified into four categories :
-The first category is the gharar (uncertainty), Jahala (ignorance) and qimar (gambling), and this category covers the first four points.
-The second category is that Bitcoin could be of “means to evil”, and this refers to points 5 and 6.
-The third category is non-consideration of Bitcoin as mal mutaqawwum.
-The fourth category is related to the prohibition of Bitcoin, according to some scholars, as a precaution, since it involves some doubtful elements that violate the permissible transactions according to the supporters of this view.
Concluding Remarks:
– This declaration is merely specific to Bitcoin, despite the similarities between cryptocurrencies (such as Bitcoin, Ripple, and Ethereum). Some differences may affect the Shariah rule of each case, and hence such differences shall be carefully examined.
– There are various contractual conditions for the formation of mining pools or groups; therefore, it is impossible to give a common Shariah opinion regarding these types of services; and hence, the contracts used by each service provider must be individually examined. This also applies to e-wallets
and trading platforms.
– The permissibility of trading Bitcoin – referring to the first view- does not imply encouraging Muslims to invest, trade-in, or speculate with Bitcoin, as such actions involve risks represented by the price fluctuation of Bitcoin against the local currencies.
file:///C:/Users/assis/Downloads/Islamic%20Economic%20Forum%E2%80%99s%20Declaration%20on%20Bitcoin.pdf
Declaration of FICNA on Bitcoin:
The Fiqh Council of North America (FCNA) is a body of recognized and qualified Islamic Scholars from the United States and Canada who accept the Qur’an and authentic Sunnah as the primary sources of Islam. Furthermore, FCNA is guided by the judicial heritage of the Prophet’s companions and the legal rulings and methodology of established classical normative Muslim Scholarship.
http://fiqhcouncil.org/regarding-the-islamic-ruling-on-bitcoins/
