Muftī Faraz Adam on the Permissibility of Cryptocurrency

In this paper, Muftī Faraz Adam considers whether Bitcoin can be considered currency in Islamic law by interpreting relevant classical legal texts with the aim of identifying the principles defining money in Islamic law. He identifies three necessary elements for currency to be money: that it constitute māl (wealth), taqawwum (legal value) and thamaniyya (monetary usage in exchange markets). He determines that Bitcoin constitutes wealth (māl) and has legal value (taqawwum), However, he determines that it cannot be considered to possess valid or stable monetary usage (thamaniyya) due to its volatility and associated risks. Muftī Adam further determines that this form of cryptocurrency does not pass the principle of preservation of wealth (hifẓ al-māl) that form part of the fundamental objectives of Islamic law (maqāṣid al-sharīʿa) and its associated values of justice or equity (‘adl).

 

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