Fatwās on Cryptocurrency: The Syrian Islamic Council and the International Union of Muslim Scholars’ al-Qaradaghi

By Raha Rafii

Throughout the last few years, Muslim scholars have contested the validity of cryptocurrency in Islamic jurisprudence, particularly in light of its quick expansion in regions like the Gulf and Southeast Asia.[1] Cryptocurrency differs from standard forms of currency in that it exists only digitally and transactions are not processed through a central authority, such as a bank or government. Instead, it is linked to a form of technology known as blockchain, a peer-to-peer computer network. In November 2021, the combined value of cryptocurrencies reached a high of $2.9 trillion, with a dramatic drop in January 2022, although cryptocurrencies continue to be valued higher than in previous years.[2]

In November 2019, the Syrian Islamic Council (SIC) issued a fatwā declaring that cryptocurrencies “like bitcoin” were ḥarām, or forbidden.[3] As a representative body, the SIC claims to represent 40 leagues and religious committees that have formed in Syria since 2011, and aims to be the chief Sunnī religious authority for the country.[4] Recognizing the wide variety of cryptocurrencies and that it would be impossible to issue a single general ruling for all of them, the Council based its ruling on several considerations: that cryptocurrencies exist only digitally, are not backed by gold or fiat currencies, and operate outside a state or other centralized legal apparatus and therefore cannot be regulated. On this basis, the SIC asserted that use of cryptocurrencies is thus inherently high-risk, as their digital-only format renders them susceptible to loss in the event of technical malfunction or hacking. The ambiguity of cryptocurrency production, as well as the lack of reference points for the evaluation of cryptocurrency in trading and pricing, prevents any authority or regulatory body from controlling market liquidity. Furthermore, their decentralization and the lack of regulation regarding their circulation means they can be used for money laundering and other illegal activities. The SIC thus prohibits the use of cryptocurrencies as they currently stand—as high-risk ventures with unknown variables, fluctuating values, and a resemblance to gambling. However, it also notes that if these risks were removed and a centralized bank or other reliable authority put various mechanisms in place to set cryptocurrency prices and prevent their manipulation, then using cryptocurrencies would not be forbidden as long as it was not mixed up with excessive interest (ribā) or other forbidden financial transactions. The fatwā is signed by fourteen members of the SIC, and was issued around the same time Indonesia’s Majelis Ulama Indonesia issued a fatwā forbidding cryptocurrencies based on their elements of uncertainty, wagering, and harm.[5]

In February 2022, the Secretary-General of the Qatar-based International Union of Muslim Scholars (IUMS) Ali al-Qaradaghi issued a brief video fatwā focusing on the question of whether cryptocurrency was a valid form of currency (ʿumla).[6] Like the SIC, IUMS is a representative body with a membership of a wide swathe of Muslim scholars. It was established by Yusuf al-Qaradawi in 2004 and gained prominence in 2011; it is an umbrella organization that represents scholars from 80 countries, mostly in the Gulf region.[7]

Al-Qaradaghi, stating that the absence of state backing and cryptocurrencies’ lack of intrinsic value meant that they cannot be considered either currency or credit value, concluded that they were an algorithm rather than a property claim (ḥaqq mālī). He applied the lightest of the prohibition categories (taḥrīm al-wasāʾil) regarding investment in cryptocurrencies, since it was not an issue of excessive interest but of protecting property (ḥifāẓa ʿalā māl). At the same time, al-Qaradaghi called for Islamic countries to adopt cryptocurrencies by issuing them—thus granting them state backing—and creating a system for them, like Venezuela has done with petroleum.

Notes:

[1] “Islam and. cryptocurrency, halal or not halal?,” Al Jazeera, April 8, 2018, https://www.aljazeera.com/economy/2018/4/8/islam-and-cryptocurrency-halal-or-not-halal.

[2] “Global Cryptocurrency Charts: Total Cryptocurrency Market Cap,” CoinMarketCap, n.d., https://coinmarketcap.com/charts/.

[3] “Syrian Islamic Council Fatwā on Cryptocurrency,” SHARIAsource, April 13, 2022, https://beta.shariasource.com/documents/4451.

[4] Thomas Pierret, “The Syrian Islamic Council,” Carnegie Middle East Center, May 13, 2014, https://carnegie-mec.org/diwan/55580.

[5] Arys Aditya, “Indonesia’s national religious council says crypto is forbidden,” Al Jazeera, November 11, 2021, https://www.aljazeera.com/economy/2021/11/11/indonesias-national-religious-council-says-crypto-is-forbidden.

[6] “Dr. Ali Al-Qaradaghi Video Fatwā on Cryptocurrency,” SHARIAsource, April 13, 2022, https://beta.shariasource.com/documents/4449/.

[7] Abdessamad Belhaj, “Beyond the Global Mufti: Religious Authority as Political Action,” Religions 13, no. 2  (January 2022): 2, https://doi.org/10.3390/rel13020100.

(Suggested Bluebook citation: Raha Rafii, Fatwās on Cryptocurrency: The Syrian Islamic Council and the International Union of Muslim Scholars’ al-Qaradaghi, Islamic Law Blog (Apr. 29, 2022), https://islamiclaw.blog/2022/04/29/the-syrian-islamic-councils-cryptocurrency-fatwa/)

(Suggested Chicago citation: Raha Rafii, “Fatwās on Cryptocurrency: The Syrian Islamic Council and the International Union of Muslim Scholars’ al-Qaradaghi,” Islamic Law Blog, April 29, 2022, https://islamiclaw.blog/2022/04/29/the-syrian-islamic-councils-cryptocurrency-fatwa/)