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Both Islamic finance and cryptocurrencies have seen significant growth in popularity in recent years. Many Australians who use Islamic finance are wondering if cryptocurrency qualifies as Sharia-compliant money, Hejaz Financial Services weighs in.
According to the Melbourne-based Halal home loan expert, Sharia law has a stringent set of rules for the Halal financial sector that dictate how money can be made, spent, and invested. These regulations stipulate those transactions involving currency must have a physical form and a definite value – cryptocurrency does not meet either of these criteria.
The reasoning behind these rules, according to Hejaz Financial Services, is that transactions that do not have a physical form or a definite value contain a degree of surprise, wagering, and wild guesses. Furthermore, cryptocurrency trading frequently facilitates practices that are prohibited under Sharia law, such as gambling or fraudulent activity.
As a result, cryptocurrencies as a form of currency do not meet Sharia requirements. Sharia loans experts, on the other hand, believe that cryptocurrencies may still have a place in the Islamic financial sector if traded as a commodity or digital asset, as long as they meet certain criteria and provide a clear benefit.
The use of cryptocurrencies as a form of currency has recently been prohibited for Muslims in Indonesia, a predominantly Muslim country, by the country’s religious leaders. Many people in Indonesia are opposed to the fatwa, as interest in cryptocurrency is rapidly growing throughout the country, with nearly 6.5 million Indonesians investing in cryptocurrency as of May 2021.
Although many Islamic countries are debating the benefits and risks of cryptocurrency, with some, such as Indonesia, outright prohibiting its use, Hejaz Financial Services points out that fatwas can be changed or reversed. Hejaz Financial Services is in the process of becoming Australia’s first fully digital Islamic bank. Hejaz Financial Services can provide you with information on Halal investing, home loans, and more.
