Ask Shaykh YQ – Episode 07 – What is the Islamic Ruling on Cryptocurrency

Yasir Qadhi

Channel: Yasir Qadhi

Series:

Topics: Fiqh

Episode Notes

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Shaykh Yasir Qadhi delves into the ruling on cryptocurrency.

Cryptocurrency is based on decentralized commodities to be a type of currency not backed by banks and the government. 

The Fiqh Council issued a fatwa that cryptocurrency is not prohibited and hence, it is halal unless proven otherwise.

Episode Transcript

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What is the Islamic ruling on cryptocurrencies? What is the Islamic ruling on cryptocurrencies on?

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E.

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So,

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cryptocurrencies are a new form of decentralized commodities. And the point of cryptocurrencies is to be a type of currency that is not backed by a government. It's not backed by a known institution. It's not backed by the banks. And it is created by groups of people that generally speaking are not too sympathetic to banks and governments. And of course, the first and most famous cryptocurrency is created by the Japanese Satoshi or obviously not an actual name. It's his pseudonym. And he created Of course, the famous Bitcoin and from the success of Bitcoin there were some people who became multimillionaires by investing $1,000 $1,000 and they became, you know, multi multi millionaires

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after 10 years. So when Bitcoin went up, so the the the Bitcoin is the most famous example of cryptocurrency, it opened the door for not hundreds 1000s of different crypto currencies. So last year, the fifth Council of North America

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dedicated a significant amount of time to talk about cryptocurrencies in our meeting in our annual meeting, and we went over this issue in a lot of detail and by unanimous consensus we issued a fatwa. To be more precise we will be issuing a fatwa within a week or two but the fatwa has been finalized I have drafted the initial draft is just going to be circulated amongst other members and then released inshallah Tada, maybe by next month after hedge, but it is unanimous we all agree, cryptocurrencies. Firstly, our factoids about Bitcoin only, not about all of the currencies, because every currency has its own ruling. The general ruling is that we did not find any reason to prohibit

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cryptocurrency, and therefore it remains at the default and the default is that everything is valid, unless proven otherwise. memorize this simple principle, my dear brothers and sisters in Islam, when it comes to Mohammed x.

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When it comes to eating and drinking and interactions with money and walking around and whatever you want to do, everything is halal. Unless the Sharia says it is wrong. So if two people are debating, is it healthy to drink water from a plastic bottle or not? One person says it's helpful the other person says is how long? Who needs to bring the evidence?

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The one who says it's wrong. The one who says is halal does not need to prove anything. Everything is valid, unless the evidence is that it is haram Is that clear? So we looked at every single criticism of cryptocurrency. And we looked at a number of fatawa committees around the globe. Some of them said it is how long some of them said it is Hello. And we looked at this in detail. And from us in North America, we concluded that none of them raised objections to the level that it makes it home. So they said for example, there is no value to cryptocurrency. And the response to this is value is relative value is relative. And you Subhanallah you asked me yesterday I saw in my newsfeed

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an original used Nike shoes from 1973 or something sold for you remember the price

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$250,000 like an old, crappy used Nike shoes. You look at it, my nose would wrinkle up. Why would you want to buy this? But it's a collector's item. Because it's the original made by the guy in 1970. Whatever, right? It's a collector's item. I don't see any value in an old shoe

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at all, but some people do. And they think it's an investment to make. Okay, so many of us we might have corals in our house when my purchase corals or $50 $100. You go to the Pacific Island, and you give them this. What is this? It's right there outside our house. Why would we take money for this? This is free for us. value is relative. What you find valuable others find values relative they said of the objections. They said there's no government that backs it. The response is you don't need to have a government to have some so all of these we looked at every objection after the other and we came to the conclusion there is no issue that will make cryptocurrencies out on in general and

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Bitcoin specifically we looked at and we said it is helpful to mine it it is helpful to invest in it and buy and trade it but the value

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fiat currency will apply to cryptocurrency, which means spot trades must occur, you must trade it on the spot value right then and there when you purchase, you get your money back, you cannot just delay and have an unknown value just like if I exchange dollars for pounds. If I exchange rupees for liras it has to be done instantaneously yet and so to cryptocurrencies must be done immediately you cannot have a transaction that is delayed. And we concluded the photo by saying that, even though we say that it is halal, still, there seems to be a gray area and especially in terms of safety in terms of wisdom, we as the field counsel, it's not our job to give investment advice. But we do

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agree with those investors who said do not invest in cryptos more money than you're willing to lose, because the Muslim is not foolish, and we should not spend our money foolishly, but the base ruling cryptocurrencies, and in particular Bitcoin that we looked at is halal. As for every cryptocurrency we have to go look at that, but generally speaking, the major ones Bitcoin Litecoin, the ones that everybody knows about these generic cryptocurrencies that are famous and are already established, there's nothing in this video how to prohibit them, yet we caution that people should not be foolish because Allah wants us to preserve our wealth. And with that a shallow tally we conclude today's q&a

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in a feed dounia Solomon

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Leah

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Leah