Is Bitcoin un-Islamic?

This year alone, bitcoin is up more than 18-fold. The surge has been driven largely by demand from individuals and risk-takers. The secret nature of Bitcoin trading may attract illegitimate activities such as money laundering, terror-financing, and tax dodging.

The Guardian Newspaper reported Friday 15th December that the Japanese company GMO Internet, which operates a range of web-related businesses including finance, online advertising, and internet infrastructure, will start paying up to 100,000 yen (£660/$890) monthly by Bitcoin to its employees in Japan from February next year.

However, the head of Britain’s financial market regulator said bitcoin is not a real currency and warned people could lose all their money if they invest.

Andrew Bailey, Head of the Financial Conduct Authority (FCA), told the BBC that the cryptocurrency was not a secure investment and was similar to gambling. He said neither central banks nor the government-backed bitcoin, making it high risk.

“It’s not a currency, it’s actually not regulated in its bitcoin form,” Bailey told BBC News night. “It’s a very volatile commodity in terms of its pricing. If you look at what has happened this year, I would caution people,” he said.

“If you want to invest in bitcoin be prepared to lose your money — that would be my serious warning,” said Bailey.

Is the Arab world ready for the Bitcoin?

The national banks of Saudi Arabia and the United Arab Emirates have announced their plan to launch a joint cryptocurrency to aid cross-border transactions between the countries.

The governor of the Central Bank of the UAE announced the plan for the new blockchain-based digital currency at this week’s Arab Monetary Fund meeting in Abu Dhabi.

In the Middle East and North Africa, bitcoin trading is very limited and has not been taken up due to security and technical concerns.

Recently the UAE Central Bank warned the public against investing in bitcoin, citing that the currency is still “unofficial” and lacks “sufficient supervision.” The virtual cryptocurrency still remains unregulated in the UAE.

According to media reports, Qatar National Bank (QNB) doesn’t permit banks and financial institutions to conduct financial transactions in bitcoin and other cryptocurrencies due to lack of safeguards and regulatory framework.

Also the question of incompatibility with Islam?

Earlier this month the media reported that a “popular Saudi cleric has ruled that cryptocurrencies are prohibited under Islamic law because they are “ambiguous” and provide anonymity to criminals”.

 
Assim al-Hakeem made the religious edict two weeks ago on his programme “Ask Zaad”, as bitcoin prices broke through the $10,000 barrier for the first time.

Since then the value has reached new heights exceeding $19000.

“We know that bitcoins remain anonymous when you deal with it… which means that it’s an open gate for money laundering, drug money, and haram (forbidden) money,” Hakeem said.

The cleric’s ruling comes after Turkey’s top religious body also decreed that bitcoins were incompatible with Islam because their value is “open to speculation” and they can be used in “illegal activities”.

However, RT (Russia Today) reported recently that Cryptocurrency as a tool of Islamic banking is being discussed by the Muslim community and could be created within the next two or three years, according to the adviser on Islamic economics and finance of Russia’s Muftis Council Madina Kalimullina.

She told TASS that based on the cryptocurrency characteristics, the coin can be halal [permissible – Ed.]. “Sharia standards do not cover this issue yet, but in the perspective of two or three years they can be developed,” Kalimullina said after a conference in Kazan.

“This topic is now very popular in the Russian Islamic community, particularly in the Caucasus, it is constantly discussed at the meetings of Islamic economists,” she added.

Until it becomes properly regulated mainstream currency, Bitcoin is unlikely to be accepted in the Middle East and the wider Islamic World.

Nehad Ismail

Nehad Ismail is a journalist based in the United Kingdom. He writes on the economic issues particularly oil and gas. He has a special interest in the Middle East. He worked 15 years in the oil industry and 6 years in the media. He worked in a newspaper and in a TV channel presenting a political program between 2005 and 2010 (Arab News Network). His articles appeared in many esteemed media. He reviewed more than 12 books.
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