One of the most controversial inventions to date is cryptocurrencies.
Some people think that they are the future of finance.
They offer many great opportunities such as convenient worldwide transactions and independency from banks.
Others argue though that there are many risks connected to them.
High volatility, fraudulent activity, and money laundering are part of the crypto daily routine.
That is the reason why many Islamic scholars think cryptocurrencies do not follow the Sharia.
This guide will clarify how a cryptocurrency can be Halal, and another one Haram.
Below, we will list all the cryptocurrencies that are Sharia Compliant.
According to the sacred law, everything connected to gambling or riba (lending money at or paying high-interest rates) is taboo.
You are probably thinking now:
“Isn’t that in the nature of crypto itself?”
Well, not necessarily.
Islamic investors have arguments supporting these digital assets.
They have found a clever way to separate them into 2 categories – Halal (permissible/Sharia Compliant) and Haram (forbidden).
With Muslims contributing to more than 23% of the total world population – around 1.6 Billion people, we have to come down to the bottom of this topic.
In the end, you will get a clear picture of the following aspects:
- How to divide coins into permissible and forbidden?
- Which coins are Haram?
- Which coins are Halal?
- How to find worthy projects to invest in?
Why cryptocurrency is haram
For us to understand better why many people consider crypto not to be Sharia-compliant, we have to go back to the roots of Islam religion.
Cryptocurrencies are digital.
That means that they lack physical form or any kind of material backing.
So, we can say that most cryptocurrencies are not real money.
People use them more often as an investment rather than to exchange them for goods and services.
That goes, of course, against the principle of Islam finance. We could then say that cryptocurrencies are Haram.
Money should be used for the things you need like food, water, clothes, etc.
With the latest Bitcoin (BTC) adoptions though things get tricky, as there are already thousands of BTC ATMs worldwide.
They allow users to convert their tokens into fiat money and use them for their basic needs.
The sacred law prohibits betting and charging or paying interest
The high volatility of crypto assets means that there is a speculative element involved.
Let’s take a look at ETH (Ethereum) for example, as it is one of the biggest and “safest” coins out there.
In a year, the price went from $3,500 in July 2021 to nearly $8,000 later in November 2021.
Then we saw a big crash and prices dipped to $2,000 in early July 2022.
Now imagine how much money was made during that time.
Not quite religious, right?
Lack of regulations
Many people are concerned that major authorities can’t keep track of cryptocurrencies and interfere if needed.
That leaves a lot of space for criminal activity.
Lately, the US is considering introducing some sort of regulations around crypto.
The Islamic world though is still silent about that and governments aren’t taking action in that direction yet.
Why is crypto Halal?
Some Islamic scholars argue that crypto can be Halal.
That is the case if it is only used for the right reasons and doesn’t involve riba (charging or paying interest), gharar (risk), and maysir (speculation/gambling).
To determine whether a cryptocurrency is Halal or Haram we have to consider a few key factors:
The nature of the project
If it provides enough transparency and has a promising long-term plan, it can be viewed as rather permissible.
Certain features can determine if a project is worthy enough or not.
We refer to the staking and the involvement of the investors in the development of the project.
The usage reasons
This aspect is very self-dependent.
What you should ask yourself is:
“Why am I buying this cryptocurrency?”
If the answer is to wait so the prices go up and reap the reward, you are in the wrong direction.
If you are viewing crypto as a true currency or a digital asset and only use it for its primal purpose, you will be fine.
In that matter, you can compare it to investing in stocks but with much higher risks.
That brings us to our last point.
Like with everything else in this world, if there is an investigation by a few authorities, it is a red flag.
As participating in a project with a criminal record is probably not that Sharia-compliant.
So, we encourage you to do your homework carefully.
Rise of the Machines – Ai to determine if a Coin is Halal
No, we are not talking about Arnold Schwarzenegger in Terminator.
We are referring to a machine-learning model that helps people determine whether a coin is Halal or Haram.
Without a detailed explanation, we will introduce you to it.
A Computer and Information Science student Shahad Z. Al-Khalifa came up with the idea of a tool named CryptoHalal.
As the name suggests it helps identify which currencies are Hallal and which Haram.
Based on 20 common features for most coins the program decides whether a project is “probably Haram” or “probably Halal”.
The only downside is that the reference information comes from a Telegram channel supervised by Islamic scholars.
That means that it can be rather subjective.
That is why there are no certain answers but rather suggestions.
With the development of deep learning though, we will see more accurate systems soon.
If you want to find out more about the model of Al-Khalifa, you can read his release paper.
Haram & Halal Coins List – A Quick Overview
To spare you some time, we have prepared for you a list of some of the best-known cryptocurrencies and their Halal/Haram status.
Halal Cryptocurrencies Quick List
1. Bitcoin [BTC]
2. Ethereum [ETH]
3. Dogecoin [DOGE]
4. Solana [SOL]
5. Binance Coin [BNB]
6. Flux [FLUX]
7. Litecoin [LTC]
8. Polkadot [DOT]
9. Polygon [MATIC]
10. Ripple [XRP]
Haram Cryptocurrencies Quick List
1. Celsius [CEL]
2. Frontier [FRONT ]
3. Shiba Inu [SHIB]
4. Venus [XVS]
5. Voyager [VGX]
6. Troy [TROY]
7. Terra [LUNA]
8. 1Inch [1INCH]
9. Bitcoin Gold [BTG]
10. Just [JST]
You can see above that projects with real-life integration and an optimistic future are permissible.
That includes Dogecoin [DOGE] which is widely associated with the current second richest man Elon Musk.
Another example is Solana [SOL].
This currency is famous for its efficiency – fast and cheap transactions.
Complete List of Halal and Haram Cryptocurrency
Now, I am guessing that you might be interested in having a complete list of Halal coin.
Sure this will be useful while researching which crypto currencies are sharia compliant.
If you know if any Halal coin that are not listed below, please make sure to comment it at the bottom of the page so we can add it.
Complete List of Halal Coin
|Halal Cryptocurrency Name||Coin Ticker|
|Basic Attention Token||BAT|
|Ethereum Name Service||ENS|
|Measurable Data Token||MDT|
|My Neighbour Alice||ALICE|
|RSK Infrastructure Framework||RIF|
|Terra Virtua Kolect||TVK|
|Unus Sed Leo||LEO|
Complete List of Haram Coin
|Haram Cryptocurrency Name||Coin Ticker|
|Alpha Finance Lab||ALPHA|
|Curve Dao Token||CRV|
|Kyber Network Crystal||KNC|
|Mirrored Invesco QQQ Trust||mQQQ|
|Mirrored United States Oil Fund||mUSO|
|Sharpe Platform Token||SHP|
More to know about the Halal & Haram sides of Crypto
There might be more questions you have in mind now that we covered the complete list of Halal and Haram crypto.
In the next few paragraphs, I will try to answer the most common ones. Let me know in the comments if anything is left unanswered.
Getting in contact with your religious scholars could also help you get answer and guide your decision.
Is Crypto Lending Halal?
Crypto lending can be Halal as long as it adheres to the principles of Sharia law, such as avoiding riba (interest) and gharar (uncertainty).
Sharia-compliant crypto lending platforms operate on a profit-sharing model or a fee-based system rather than charging interest.
In Islamic finance, profit and risk sharing are encouraged, making crypto lending permissible when it follows these principles.
It is important for Muslims to conduct due diligence and seek advice from religious scholars before engaging in any financial activity, including crypto lending.
Do You Have to Pay Zakat on Crypto?
Yes, you have to pay Zakat on Crypto if it meets the Nisab and Lunar Year requirements set by Sharia law.
Zakat is an obligatory charity in Islam, and it applies to all assets, including crypto.
The value of crypto fluctuates, so its Zakat calculation requires careful consideration of its current market value.
It’s important to note that not all scholars agree on the Zakat requirements for crypto.
Is crypto Staking Halal?
In Sharia-compliant crypto staking, an individual can earn rewards by locking their crypto assets in a network for a certain period of time.
The rewards earned are typically based on a profit-sharing model, where the individual receives a portion of the profits generated by the network. This method aligns with the principles of risk-sharing and entrepreneurship in Islamic finance.
In contrast, non-Sharia-compliant staking may involve earning a fixed interest rate, which is considered riba (usury) and is prohibited in Islam.
So, it’s important for Muslims to ensure that the staking method they choose is Sharia-compliant and aligned with the principles of Islamic finance.
Is mining crypto Halal?
Sharia-compliant mining involves earning rewards through a proof-of-work system, which is considered an acceptable method of earning money in Islam.
But, it’s important to note that mining can also involve significant environmental costs and may be seen as contributing to harm, which is against Islamic ethics.
Also, if the mining process involves unethical practices or contributes to illegal activities, it would not be considered Halal.
That’s all folks!
As Porky Pig would say at the end of a Looney Tunes cartoon, we are concluding.
To sum everything up, we can say that the debate around cryptocurrencies is still ongoing within the Muslim community.
It is hard to give a certain answer whether a coin is Halal (permissible) or Haram (forbidden).
Or should you take part in crypto as a Muslim at all?
Yet, by understanding the key factors around the topic, you can make an informed decision about yourself.
Please let me know what you think in the comment section as I think that this subject might bring a good debate. I am very curious to see what everyone thinks.
I hope that our complete list of Halal and Haram cryptocurrencies helped you!