Are Cryptocurrencies Compatible With Islamic Finance? What Fatwa Bodies and Regulators Say

There is no single Islamic ruling on cryptocurrency. Egypt’s Dar al-Ifta and Turkey’s religious authority have called trading bitcoin impermissible, Indonesia’s ulema council bars crypto as currency but allows some trading as a commodity, and Malaysia’s Securities Commission Shariah council permits trading on registered exchanges. The OIC’s Fiqh Academy has deferred a ruling, and AAOIFI has issued no crypto standard.

This article was first published in March 2023. It has been rewritten with a comparison of rulings from named fatwa bodies, a June 2026 fatwa from Darul Uloom Karachi, the current position of the OIC’s Fiqh Academy and AAOIFI, regulatory status in major Muslim-majority markets and the original Arabic of a key hadith with its full reference.

Reviewed by Hafiz Maqsood Ahmed.

The question has moved from forums to regulators. Pakistan created a federal virtual-assets regulator with its own Shariah advisory committee in 2025, Islamic banks in the UAE now offer bitcoin buying inside their apps, and Indonesia moved crypto supervision to its financial services authority in January 2025. For the more than 2 billion Muslims counted by the Pew Research Center, the answer depends heavily on which authority they follow. The Halal Times reports these positions; it does not issue rulings.

The Shariah questions scholars ask

Scholars generally test cryptocurrency against four questions:

• Is it property (mal)? Something must have recognized value to be owned and sold.
• Can it serve as money (thaman)? Some scholars require state backing or wide acceptance.
• Is there excessive uncertainty (gharar)? Extreme volatility and opaque projects raise this concern.
• Does it resemble gambling (maysir)? Speculative trading on price swings can.

The prohibition of gharar comes from hadith such as this one, narrated by Abu Huraira. Hadith numbers follow the Sunnah.com numbering, so anyone can look up each hadith there; printed editions sometimes number them differently.

نَهَى رَسُولُ اللَّهِ صلى الله عليه وسلم عَنْ بَيْعِ الْحَصَاةِ وَعَنْ بَيْعِ الْغَرَرِ ‏.‏

“Abu Huraira (Allah be pleased with him) reported that Allah’s Messenger (ﷺ) forbade a transaction determined by throwing stones, and the type which involves some uncertainty.”

Reference: Sahih Muslim, The Book of Transactions (Kitab al-Buyu’), Hadith 1513 (in-book reference: Book 21, Hadith 8).

Cryptocurrency does not involve interest in itself, but lending and yield products built on it may. That is one reason scholars separate holding a coin from staking, lending or trading derivatives on it.

What fatwa bodies and scholars have ruled

Sources: Ahram Online (Egypt); Euronews (Turkey); Mondaq (UAE fatwa No. 89043); The Edge Malaysia; Al Jazeera (Indonesia); International Islamic Fiqh Academy, Resolution No. 237 (8/24); Dawn (Pakistan); AAOIFI news.

The positions differ in their reasoning. Egypt’s Dar al-Ifta focused on the lack of state backing and supervision, according to Ahram Online. Malaysia’s position was announced by the Securities Commission’s chairman, Datuk Syed Zaid Albar, who said the council had found it “permissible to invest and trade in digital currencies and tokens on registered digital asset exchanges.” The Karachi fatwa, reported by Dawn on July 10, 2026, went further than most by denying that crypto is property at all.

Some scholars and firms have argued for permissibility. Mufti Muhammad Abu Bakar concluded in a 2018 analysis for Blossom Finance, a Shariah-compliant fintech company, that bitcoin is generally permissible where it is widely accepted as money, but not where national law bans it, and that many token offerings involve excessive uncertainty, according to the company’s published paper.

What regulators allow

Whether crypto is lawful in a country is a separate question from whether scholars consider it permissible, but the two increasingly interact.

• Indonesia: Supervision of crypto assets moved from the commodities regulator to the Financial Services Authority (OJK) on Jan. 10, 2025, OJK said. Crypto is not legal tender.
• Pakistan: The Virtual Assets Act, 2025 created the Pakistan Virtual Assets Regulatory Authority, which licenses firms and oversees a Shariah advisory committee, Arab News reported.
• UAE: Dubai regulates virtual assets through the Virtual Assets Regulatory Authority under a 2022 law, according to the Library of Congress.
• Bangladesh: The central bank said in September 2022 that dealing in virtual assets is not permitted, The Business Standard reported.

Shariah-certified crypto products

A small market of Shariah-certified crypto services has emerged, each certified by its own advisers rather than by a national authority.

• Rain, a Bahrain-based exchange, obtained Shariah certification for buying, selling and holding bitcoin, ether and litecoin from the Shariyah Review Bureau, according to the Bahrain Economic Development Board.
• Ruya, a UAE Islamic digital bank, launched bitcoin buying in its app in late 2025 under its own Shariah committee, Arabian Business reported.
• Fasset, based in Dubai, received a provisional license from Malaysia’s Labuan Financial Services Authority in October 2025 for a stablecoin-based Islamic digital bank, Unlock reported.

A certificate from one Shariah adviser does not bind other scholars, and the Karachi fatwa shows that influential authorities reject the asset class altogether. Investors who want to proceed usually limit themselves to spot holdings on regulated exchanges and avoid interest-bearing lending, borrowing to trade and derivatives. Our explainer on making halal money from cryptocurrencies covers specific strategies.

Frequent trading raises its own questions, examined in our guide on whether day trading is halal.

For context on the wider industry, our guide to Islamic finance and fintech describes how digital platforms fit into Shariah-compliant banking and investment.