What Islamic Scholars Say About Cryptocurrency in: The Halal Screen in Plain English

Do not start with a headline or a hot take. Start with the screen: asset purpose, revenue source, trading structure, custody, and risk. This guide gives you the practical halal checks before the market tries to rush your decision.

The Early Years: Caution and Prohibition (2017–2020)

When Bitcoin surged into mainstream consciousness in 2017, Islamic scholars were largely caught off-guard. The technology was new, the regulatory environment was undefined, and the speculative frenzy that accompanied that bull market gave religious authorities every reason for caution.

Egypt's Dar al-Ifta, one of the oldest and most respected Islamic scholarly institutions in the Sunni world, issued an initial opinion in 2018 characterizing cryptocurrency trading as resembling gambling due to its extreme price volatility and the absence of any underlying tangible asset. The institution's scholars were concerned about maysir (gambling), gharar (excessive uncertainty), and the potential for cryptocurrency to facilitate illegal financial flows outside state oversight.

Similar caution came from Turkey's Directorate of Religious Affairs (Diyanet), which issued a statement in 2017 suggesting that cryptocurrency trading was not compatible with Islamic principles, citing currency manipulation risks and the absence of central oversight as primary concerns.

These early prohibitions were not without merit. The crypto market of 2017–2018 was rife with speculative ICOs (Initial Coin Offerings), many of which bore all the hallmarks of gharar-heavy transactions — the asset was undefined, the counterparty's reliability was questionable, and the outcome was largely random. Scholars applying traditional frameworks to this new phenomenon were right to be cautious.

Mufti Taqi Usmani's Nuanced Position

Mufti Muhammad Taqi Usmani, widely regarded as the foremost living authority on Islamic finance and a key architect of the AAOIFI standards, did not issue a blanket prohibition on cryptocurrency. Instead, his position — articulated across several interviews and scholarly discussions in the 2018–2022 period — centered on a distinction between the technology and the use of that technology.

Usmani acknowledged that blockchain as a ledger technology is neutral and potentially beneficial. His concern was specifically with the use of cryptocurrencies as a medium of speculation rather than as a medium of exchange or a store of value with genuine utility. He highlighted that the absence of any sovereign backing or physical commodity backing made many cryptocurrencies resemble financial instruments that exist purely for speculative gain — a description that fits derivatives and highly leveraged products more than it fits spot-traded major assets.

This distinction — between the instrument itself and how it is used — would become the cornerstone of the emerging consensus.

The Turning Point: AAOIFI Shariah Standard 62 (2021)

The single most important development in Islamic scholarly treatment of digital assets came in 2021, when the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) published Shariah Standard No. 62, titled "Cryptocurrency."

AAOIFI is not a regulatory body, but its standards carry enormous weight across the Islamic finance industry. Banks, investment firms, and financial regulators in Bahrain, Malaysia, Pakistan, Sudan, the UAE, and beyond use AAOIFI standards as the foundation for their own regulatory frameworks. Standard 62 was, therefore, the first authoritative attempt by a major Islamic standards body to provide a structured framework for evaluating digital assets.

Key Findings of AAOIFI Standard 62

The standard makes several critical distinctions:

Digital currencies as a new asset class. AAOIFI recognized that cryptocurrencies constitute a novel category of asset that does not fit neatly into existing Islamic finance categories (currency, commodity, financial instrument). This recognition itself was significant — it acknowledged that entirely new ijtihad (legal reasoning) was required rather than simple analogical reasoning from existing categories.

Permissibility is conditional, not absolute. The standard does not declare all cryptocurrencies halal or all haram. Instead, it establishes that permissibility depends on the nature of the underlying asset, the nature of the transaction, and whether the transaction avoids riba, maysir, and gharar.

Speculation is haram; utility is potentially halal. AAOIFI drew a clear line between cryptocurrencies that exist primarily as utility tokens (enabling genuine services on a blockchain network) and those that exist purely as speculative instruments. Spot trading of utility-bearing cryptocurrencies may be permissible; futures, perpetual swaps, and leveraged trading are identified as problematic.

The importance of settlement. The standard emphasizes that transactions must involve genuine transfer of ownership with immediate or near-immediate settlement — a requirement that rules out most derivatives products.

Sheikh Yusuf DeLorenzo and the Utility Framework

Sheikh Yusuf Talal DeLorenzo, former Chief Shariah Officer at Shariah Capital and one of the most respected Islamic finance scholars in the English-speaking world, contributed significantly to the intellectual groundwork that preceded and followed Standard 62. His work on digital assets emphasizes the concept of manfa'a (benefit or utility) as the key determinant of permissibility.

DeLorenzo's framework asks: does this asset enable or represent a genuine economic service? A cryptocurrency that grants access to a decentralized computing network may possess genuine manfa'a and therefore grounds for permissibility. A cryptocurrency that exists solely as a vehicle for price speculation has no such foundation.

This utility-based framework has been widely adopted by subsequent scholars and has become one of the core lenses through which Islamic jurisprudence now examines digital assets.

The Malaysian Securities Commission: A Regulatory Model

Malaysia occupies a unique position in the global Islamic finance ecosystem. Its Securities Commission (SC) is one of the few regulatory bodies in the world that has explicitly regulated digital assets from an Islamic finance perspective, working in tandem with the Securities Commission's Shariah Advisory Council.

Malaysia approved cryptocurrency exchanges for trading specific digital assets as early as 2019, and by 2023 had issued detailed Islamic capital market guidelines that include digital asset frameworks. The Malaysian approach distinguishes between digital assets approved for Islamic capital market purposes and those that do not — providing a practical regulatory model that several other Muslim-majority jurisdictions have begun to study and adapt.

The SC's Shariah Advisory Council has affirmed that digital assets representing genuine utility and traded on a spot basis are potentially permissible, aligning with the AAOIFI Standard 62 framework.

The OIC Fiqh Academy: Ongoing Deliberations

The Organization of Islamic Cooperation's International Islamic Fiqh Academy has been deliberating on cryptocurrency for several years. As of 2026, the Academy has not issued a definitive fatwa, reflecting genuine scholarly disagreement that still exists on certain dimensions.

The Academy's deliberations have, however, produced significant clarity on what scholars agree about — and these areas of agreement are arguably more important than the remaining disagreements.

Where Scholars Agree: The Emerging Consensus Points

By 2026, a meaningful consensus has emerged across different schools of thought and different geographic scholarly traditions.

Speculation (maysir) is haram. There is near-universal agreement that using cryptocurrency markets for pure speculation — day trading without analysis, high-frequency gambling on price movements, or using leverage to amplify bets — falls under the prohibition on maysir.

Futures and derivatives are haram. Perpetual swaps, futures contracts, and options on cryptocurrency are almost universally viewed as impermissible. They involve selling something that one does not own, contain elements of riba (through funding rates), and are fundamentally speculative instruments with no requirement for genuine asset delivery.

Spot trading of utility-bearing assets may be permissible. The growing consensus is that buying and holding established cryptocurrencies with genuine utility on a spot basis — with genuine settlement and ownership transfer — is potentially permissible, subject to appropriate screening.

Where Scholars Still Disagree

Honest scholarship requires acknowledging the areas of genuine disagreement:

The status of Bitcoin as a "currency." Some scholars hold that for an asset to be a legitimate currency in Islamic law, it must have sovereign backing or a commodity backing. Others argue that widespread acceptance and utility are sufficient.

Privacy coins. Cryptocurrencies designed primarily to obscure transactions are viewed with significant skepticism by most scholars.

Staking and yield products. Whether staking returns from proof-of-stake blockchains constitute riba is actively debated. We exclude staking yield products from our platform until broader scholarly consensus emerges. See our halal methodology for details.

Why the Trajectory Points Toward Permissibility for Major Assets

The overall direction of scholarly opinion is clear: spot trading of established, utility-bearing cryptocurrencies through compliant platforms is moving toward mainstream permissibility. This trajectory is driven by three factors.

First, the technology has matured. The speculative chaos of 2017 has given way to assets with identifiable utility, established market infrastructure, and regulatory oversight in multiple jurisdictions.

Second, the framework has been established. AAOIFI Standard 62 gives scholars a common language and common criteria.

Third, the Muslim investor community needs guidance, not prohibition. Scholars who work in the Islamic finance industry are aware that millions of Muslim investors are participating in cryptocurrency markets. The pastoral and practical dimension of fiqh requires that scholars engage seriously with this reality.

Our halal methodology reflects these scholarly developments. We apply the AAOIFI Standard 62 framework rigorously to every asset we list. View our tiers to understand how this is implemented in practice.

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Frequently Asked Questions

Has any major Islamic institution definitively declared cryptocurrency halal? No major institution has issued a blanket halal declaration for all cryptocurrencies. AAOIFI's Standard 62 provides a framework for evaluation, and several national Islamic finance bodies — particularly in Malaysia — have approved specific digital assets for Shariah-compliant trading. The nuanced answer is that specific assets, traded in specific ways, may be permissible.

What did Egypt's Dar al-Ifta ultimately conclude about cryptocurrency? Dar al-Ifta's initial 2018 position was cautionary and leaned toward prohibition, focused primarily on speculative trading. The institution has since acknowledged the complexity of the issue and the legitimacy of the AAOIFI framework, while continuing to warn against purely speculative approaches.

Does Mufti Taqi Usmani endorse cryptocurrency trading? Usmani has not issued a blanket endorsement. His position distinguishes between speculative trading (which he views as problematic) and genuine utility-based ownership. His framework is essentially the basis of the AAOIFI Standard 62 approach — the most authoritative Islamic finance framework for digital assets.

Are staking rewards considered riba by most scholars? This remains one of the more actively debated questions. A significant number of scholars view proof-of-stake staking as analogous to partnership (musharakah) where rewards come from genuine network participation, not interest on a loan. Others maintain concerns about the quasi-fixed nature of staking yields. We exclude staking yield products from our platform until broader scholarly consensus emerges.

Why do scholars disagree even when applying the same principles? Islamic jurisprudence has always involved legitimate scholarly disagreement (ikhtilaf). Scholars apply shared principles — the prohibition of riba, maysir, and gharar — but differ in how they classify novel financial instruments. Scholarly disagreement on specific points does not undermine the broader framework.

What is the significance of AAOIFI Standard 62 specifically? AAOIFI Standard 62 represents the first systematic attempt by a major transnational Islamic finance standards body to address digital assets. It provides a shared framework — an agreed vocabulary and set of criteria — that enables consistent scholarly analysis. Before Standard 62, every scholar was essentially constructing their own analytical framework from scratch.

How should a Muslim investor think about the remaining scholarly uncertainty? Islamic jurisprudence has always recognized that where genuine scholarly uncertainty exists, a Muslim may follow a qualified scholarly opinion without sin. The principle of ihtiyat (caution) suggests focusing on spot-only trading of established assets through screened platforms. Get started to see how we apply this in practice.

What to do next

Use the article as a screen, not a signal to rush. Check the asset, read the cited reasoning, avoid leverage, and keep custody and risk limits clear. When in doubt, choose the slower path: screen first, trade only after the rationale holds up.