In recent years, both the Islamic finance sector and cryptocurrencies have risen significantly in popularity.
Many Australians who utilise Islam finance are curious about whether cryptocurrency falls under the realm of Sharia-approved finance; Hejaz Financial Services weighs in.
The Melbourne-based Halal home loan expert explains that Sharia law has a strict set of regulations for the Halal financial sector that dictate how money can and cannot be made, spent and invested.
These regulations state that when it comes to currency, transactions should have a physical form and a definite value – cryptocurrency does not meet either of these requirements.
Hejaz Financial Services explains that the reasoning behind these rules is that transactions that do not take a physical form or have a definite value carry an element of uncertainty, wagering and speculation.
In addition, the trading of cryptocurrencies often catalyses practices that are outlawed under Sharia law, such as gambling or fraudulent activity.
Thus, cryptocurrencies do not meet Sharia standards as a form of currency.
However, Sharia loans experts assert that cryptocurrencies may still have a place in the Islamic financial sector if they are traded as a commodity or digital asset, as long as they meet requirements and display a clear benefit.
The use of cryptocurrencies as a form of currency was recently banned for Muslims in Indonesia, a predominantly Islamic country, by the country’s council of religious leaders.
Many in the country oppose this fatwa, as interest in investing in cryptocurrency is rapidly growing throughout Indonesia, with nearly 6.5 million Indonesian residents investing in cryptocurrency as of May 2021.—PR Newswire
