Question:
What do the scholars and experts of shari’ah say regarding the use, trade, and investment of Bitcoin and other digital currencies, considering their volatility, speculative nature, and lack of central authority?
Answer:
All perfect praise is for Allah ﷻ, The Lord of the Worlds. I testify that there is none worthy of worship except Allah ﷻ, and that Prophet Muhammad ﷺ is His Messenger.
Bitcoin and other digital currencies constitute a novel financial phenomenon, the ruling of which is not explicitly mentioned in the Qur’an or Sunnah. Hence, its legal status is an ijtihadi matter that requires careful analysis through classical juristic maxims and the higher objectives of Islamic law (Maqasid al-Shari‘ah).
The Qur’an provides foundational guidance regarding lawful trade and prohibited usury. Allah Almighty states: “وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا – Allah has made trade lawful and forbidden usury.” (Al-Baqarah: 275)
The above verse confirms that commercial activity is inherently permissible while interest (riba) is strictly prohibited. Further, Allah ﷻ emphasises the requirement of mutual consent in transactions: “لَا لا تَأْكُلُوا أَمْوَالَكُم بَيْنَكُم بِالْبَاطِلِ إِلَّا أَن تَكُونَ تِجَارَةً عَن تَرَاضٍ مِّنكُمْ – Believers, do not consume one another’s wealth unjustly, but only through mutual agreement in trade.” (Al-Nisa: 29) This verse establishes شرط (condition) as essential for lawful exchanges.
From a juristic perspective, the maxim “الأصل في المعاملات الإباحة – The default ruling in financial transactions is permissibility” indicates that all financial dealings are allowed unless a specific prohibition is demonstrated. Similarly, the principle “العادة محكمة – customary practice is legally recognised” acknowledges that widespread acceptance (‘urf) can lend legitimacy to new financial instruments. On this basis, many contemporary scholars classify Bitcoin as māl (legally recognised wealth) due to its transferability, market acceptance, and measurable value.
Nevertheless, permissibility is not absolute. The Prophet ﷺ stated: “نَهَى رَسُولُ اللَّهِ ﷺ عَنْ بَيْعِ الْغَرَرِ” (Muslim), which prohibits transactions with excessive uncertainty (gharar fahish). Given Bitcoin’s pronounced price volatility, this principle raises significant concerns. Additionally, the Prophet’s ﷺ guidance: “الذَّهَبُ بِالذَّهَبِ… يَدًا بِيَدٍ” establishes the rules for sarf (currency exchange), implying that if Bitcoin is treated as currency, it must be exchanged hand-to-hand (immediate possession / taqābuḍ) and free from riba.
Other juristic principles apply as well. “لا ضرر ولا ضرار” “do not harm or be harmed” (Ibn Majah) emphasises the avoidance of financial loss, especially for inexperienced participants. Likewise, سدّ الذرائع “blocking the means to harm” justifies restricting instruments that facilitate prohibited outcomes, such as fraud, illicit financial flows, or speculative behaviour resembling قمار (gambling). Indeed, if Bitcoin trading is primarily speculative without genuine economic utility, it may be considered impermissible under these principles.
Considering the higher objectives of shari‘ah, particularly حفظ المال “the protection of wealth” a cautious and balanced approach is essential to safeguard individuals and communities from undue financial risk. Considering the above evidences, the most comprehensive conclusion is that Bitcoin is neither categorically halal nor absolutely haram. Its permissibility depends on context: if used as a legitimate medium of exchange or asset within Sharī‘ah-compliant parameters; free from ribā, excessive gharar, deception, and purely speculative intent then it may be conditionally permissible. Conversely, when dominated by uncertainty, harm, or gambling-like speculation, it is impermissible. Accordingly, exercising prudence (ihtiyāṭ).
And Allah ﷻ knows the best.
This fatwa is written by Dr. Hafiz Muhammad Munir Al-Azhari