A recent declaration by an Islamic scholar that Bitcoin is compliant with Sharia law could be the cause behind today’s $1000 price surge, opening the market to Muslim investors who were previously unsure if the cryptocurrency qualified as money under the Sharia law.
Bitcoin falls under certain definitions of money in Sharia law – anything that becomes widely accepted as currency by society or government mandate.
Mufti Muhammad Abu Bakar, a Sharia adviser and compliance officer at Blossom Finance in Jakarta, published a paper ruling that in certain cases, Bitcoin can indeed be Halal (permitted).
An excerpt read:
“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.”
Furthermore, Bitcoin and blockchain technology align well with Sharia ideology. Fractional reserve banking where the ownership of the money involved is the result of an “unethical loan” (usury) is forbidden. Because blockchain undeniably proves ownership, it is actually more compliant with Sharia than banking, and this was all included in the paper published by Mufti Muhammad Abu Bakar.