Muslim investors weighing whether to invest in digital assets face a problem with no single answer. Islamic commercial law is centuries old, the asset class barely two decades, and the institutions that guide the faithful disagree on how existing principles apply to it. Malaysia’s securities regulator has a Shariah council that approved trading on registered exchanges in 2020. A fatwa from Darul Uloom Karachi, signed in June 2026 by Mufti Muhammad Taqi Usmani and five other scholars, concluded that crypto is not wealth at all.
So, rather than chasing a single verdict, it helps to understand the tests scholars actually apply when evaluating cryptocurrency.
Trade What You Own
Islamic commercial law places heavy weight on possession (qabd). The Prophet told the companion Hakim ibn Hizam not to sell what he did not have. Does a purchase deliver the coin itself into an account in the buyer’s name, or does it create only a contract that tracks the price?
Scholars who accept crypto at all tend to confine their approval to spot purchases, where the asset changes hands and the buyer carries its full risk. Anyone evaluating a crypto trading platform should therefore check whether it delivers actual coins, whether leverage is involved, and whether short selling is offered. Interest-funded margin raises a riba problem, while short selling can raise questions about trading an asset that the seller does not own.
Does Crypto Count as Property?
Everything else depends on whether a coin is mal, a thing of recognized value that can be owned and exchanged.
The Securities Commission Malaysia’s Shariah Advisory Council announced that digital assets are recognized as mal and that trading them on regulated exchanges is permissible, as the commission’s chairman later explained in a public address in 2020. Mufti Muhammad Abu-Bakar reached a broadly similar view in a 2018 paper for the Indonesian fintech firm Blossom Finance, arguing that bitcoin is generally permissible because markets treat it as a store of value and a medium of exchange, though not where national law bans it.
The opposing camp carries real weight. Egypt’s Dar al-Ifta ruled bitcoin trading impermissible at the start of 2018, citing the absence of state oversight and the risk of fraud. The Karachi fatwa, reported by Dawn in July 2026, went further, describing crypto balances, the stablecoin USDT included, as mere numbers recorded in an account. On that view, paying in crypto does not even transfer ownership of what is bought.
The OIC’s International Islamic Fiqh Academy has deliberately held back. Its 2019 resolution on electronic currencies classified coins, altcoins and tokens, then called for further research given how unstable these markets are. AAOIFI has not issued a dedicated crypto standard either.
Volatility Is Not the Same as Uncertainty
Excessive uncertainty (gharar) is one of the main objections raised about cryptocurrency. Jurists, however, have long separated the minor uncertainty present in almost every sale from the kind that goes to the heart of a contract: not knowing what is being sold, whether it exists, or whether it can be delivered.
Some contemporary scholars argue that price swings alone do not necessarily constitute contractual gharar. A known quantity bought at a known price and delivered immediately leaves little ambiguity in the deal itself. Future value is uncertain, but so is the future value of shares or gold. The objection grows stronger with opaque token launches, anonymous developers, or projects whose underlying rights are vague. Even the permissive Blossom Finance paper warned that many coin offerings of its day probably carried excessive uncertainty.
Maysir and the Line Between Investing and Betting
Maysir refers to prohibited games of chance in which gain depends on an uncertain outcome rather than a legitimate commercial exchange. Ordinary commercial risk is different; the legal maxim al-ghunm bil-ghurm holds that the right to profit comes with exposure to loss.
When Indonesia’s Ulema Council (MUI) declared crypto unlawful as a currency in November 2021, it cited uncertainty, wagering and harm, yet left room for trading it as a commodity that meets Shariah conditions and shows clear benefit. Buying an asset out of conviction and holding it through price cycles raises different questions from making rapid, leveraged bets on short-term price movements. Conduct matters, not only the asset.
Different Tokens, Different Rulings
Treating “crypto” as one category hides more than it reveals. Native coins such as bitcoin and ether are central to the debate over whether cryptocurrency qualifies as property. Utility tokens are judged by what they unlock, so a token tied to a lawful service differs from one linked to gambling or interest-based lending. Asset-backed tokens bring older rules into play. PAX Gold, for instance, represents one fine troy ounce of London Good Delivery gold held in vaults. If treated as a representation of gold ownership, its exchange may be subject to the specific Shariah rules governing gold transactions. Based on the hadith of Ubada ibn al-Samit, these rules require the exchange to take place immediately rather than through deferred settlement. Scholars who accept such tokens therefore insist that they represent allocated, identifiable gold and that the exchange occurs immediately.
Stablecoins raise their own questions, since some are backed by reserves that include interest-bearing government debt. Lending crypto for a fixed return runs straight into the prohibition on riba, however it is branded, while staking rewards remain contested.
What Is Settled and What Remains Open
Some principles are well established. Interest-based lending and borrowing are prohibited , as are selling what one does not own and wagering without genuine exchange.
Other questions remain open: whether a decentralized coin qualifies as property or money, whether volatility amounts to gharar, and whether stablecoins resting on interest-bearing reserves are acceptable. Credible authorities disagree on each, so the sound course is to consult a qualified scholar or Shariah board.
The practical sequence is to confirm what is actually owned, avoid leverage and interest-bearing features, scrutinize the project behind the token, and be honest about whether a trade is an investment or a wager.
