Islamic Scholar Potentially Opened Cryptocurrency Market to 1.6 Billion Muslims
April 13, 20184min1446
Scholar recently concluded that Bitcoin is Sharia Law compliant in some specific cases
Being Sharia compliant could see the world’s Muslim population take an interest in cryptocurrency
Scholar, who is also a member of Islam, recently concluded that Bitcoin is Sharia law compliant, which may potentially open the cryptocurrency market to the world’s Muslim population of over 1.6 billion people.
Mufti Muhammad Abu Bakar, the scholar, which is also A sharia adviser and compliance officer at Blossom Finance in Jakarta said:
In Germany, Bitcoin is recognized as a legal currency and therefore qualifies as Islamic money in Germany. In countries such as the US, Bitcoin lacks official legal monetary status but is accepted for payment at a variety of merchants, and therefore qualifies as Islamic customary money.
Islam’s strict monetary policy
Islam has strict guidelines concerning money, and when a currency doesn’t meet those definitions it is considered forbidden. Commodities, considered to have inherent value like gold, are favored by Sharia Law and for digital or paper currency to be recognized as a valid payment method, it needs to be backed by a commodity at a fixed exchange rate.
Of course, who’s to say what has inherent value? Sharia law also allows ”customary money” currency that has become accepted as a payment method through social o government mandate. This is the clause that allows Bitcoin to be considered as a permitted method of payment.
Interestingly, blockchain is actually more permissible than banking in many ways. ”Loaning money into existence”, as Bakar puts it, is completely forbidden and falls under the definition of usury – loaning at high interest rates.
Fractional reserve banking is therefore non-compliant with Sharia Law. Blockchain, on the other hand, does not work like this – the assets and their owners are at all times traceable in the ledger, making it amenable to Sharia law scholars.
A major conference of Islamic scholars was held on April 9 to discuss cryptocurrencies, a sign that the issue of crypto in the massive Islamic banking world is one that can no longer be ignored.
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