Siddiq Bazarwala
Note: This article is based on the personal opinion of the author, and by no way a fatwa on the bitcoin issue.
In an era swamped with endless news feeds, we find ourselves constantly finding ways to make a quick buck within the shortest time possible.
As a timely example, cryptocurrency is all the rage and increasing number of Muslims are found to wonder if investing in such instruments permissible?
The key to success therefore, is not to follow the herd but to spend a few moments learning about the safeguards the religion of Islam has blessed Muslims with.
STOCKS, BONDS AND BITCOIN
To explain in layman terms, Islam does not allow investments in bonds because all bonds (except Islamic sukuks) are “interest-bearing” that is, they pay interests. This is why bonds are haram.
Islamic Sukuks are allowed but these are only available in Malaysia, Indonesia, Turkey and perhaps in Pakistan. The notable problem worth mentioning is that all Sukuks have to be approved by a shariah board and sometimes, you can have one shariah board approving an Islamic sukuk while another shariah board citing shariah problems with its structure will prohibit the exact same Islamic sukuk, illustrating divergent views in the Muslim world.
In terms of stocks, we Muslims need to ensure the companies/stocks involved are shariah-compliant, a term that simply means companies are not involved in lending or insurance (since taking, giving or witnessing a transaction involving interests is haram); or hotels, restaurants, breweries, airlines and casinos (since they derive substantial revenue from the sale of alcohol). In fact, it is also best to stay clear of certain media companies that distribute indecent images or magazines.
Put simply, it is forbidden to invest in companies that participate in businesses that is haram (e.g., real-estate companies that rely on bank lending for land purchases) or deals in riba, whether taking or giving, because that comes under the heading of helping in sin and transgression and Allah has forbidden this by stating (Quran 5:2):
“Help you one another in Al‑Birr and At‑Taqwa (virtue, righteousness and piety); but do not help one another in sin and transgression. And fear Allah. Verily, Allah is Severe in punishment.”
Broadly speaking, investing in construction, pharmaceuticals, fast-moving consumer goods, etc., should be okay however, it all depends whether the company/stock is self-funded from its internal profits or relies on bank lending and/or the bond market for its day-to-day operations.
Bitcoin is a digital currency, operating without a central bank or any form of regulatory supervision, which is the first red flag anyone should pay special attention to.
At the beginning of 2017, it had a value of just below $1,000 and shot up to US$20,000 before the end of the year only to fall by US$5,000 before closing the year at approximately US$15,000, with no one able to explain why it has shot up or fallen by so much except perhaps because a lot of people have invested it in, the second sign of what is often known in investment circles as a pyramid scheme (where a lot of people are fooled into investing in a certain idea before it fails – and everyone loses money – especially people at the bottom of the pyramid, that is the early investors who lose the most).
As of 10 January 2018, the value of bitcoin stands at US$13,603, further pointing to how more people appear to be selling rather than buying into bitcoin, perhaps another reason to stay away rather than jump in right now. This notwithstanding the fact that Bitcoin is volatile, a cornerstone contradiction when it comes to shariah compliance.
To be fair, the US dollar is sometimes cited as a preferred currency for money laundering and a lot of criminal activity is paid for using this currency however the USD is a solid currency, widely and heavily regulated and trillion dollars worth of global trade is firmly hinged against it therefore, making the USD the world’s most secure currency.
Bitcoin on the other hand, has also been known to be the preferred currency of syndicates and criminal gangs involved in ransom, kidnapping, drugs, and blackmail, etc., given how payments can be made anonymously, protecting the identity of the recipient – indisputably attractive feature for the criminal underworld.
Therefore, for this reason alone, bitcoin is as haram as it sounds. In the words of Turkey’s Directorate of Religious Affairs, known as Diyanet:
“The cryptocurrency is widely used for nefarious and illegal activities, and is not sufficiently regulated, making it far more volatile than other currencies.”
Yes, on the other hand still, there are news reports about a bitcoin exchange in U.A.E (hardly a bastion of Islamic values) as well as bitcoin services being offered in Qatar, Kuwait, Bahrain and Saudi Arabia, let alone Indonesia and Malaysia but to say this proves bitcoin is halal is like saying alcohol consumption or prostitution is halal since both are readily found in Indonesia, Malaysia, Turkey let alone in U.A.E, proving it is upon every Muslim to be responsible when it comes to finding out where every penny in our pocket comes from.
In the astute words of a the Deputy Minister for Islamic Affairs in Malaysia, speaking at a conference in Malaysia in late April 2017:
“Datuk Dr Asyraf Wajdi Dusuki lamented today that Muslims here care more about the halal status of their food, compared to the status of their source of income.”
Muslims care more about halal food than halal income: Malaysian deputy minister
CONCLUSION:
This is precisely why Islam introduced safeguards cautioning Muslims to keep away from investment products that are “interest bearing” since interest benefits no one but the greedy rich and hurts the disempowered poor, in any given community, anywhere around the world.
Islam also forbids speculative investment products since humans are driven principally by greed – and greed combined with speculation is a perfect recipe for financial disaster.
Last but no least, we are advised to stay away from unregulated investment products, undeniably being used by criminals and of course ordinary investors driven by confusion and greed but more because such products often rise and fall like the tide – uncertain, unpredictable and dangerous.
Whatever the divergent shariah view, basic logic based on an honest rationale says: swim away and take this hadith in Bukhari and Muslim of Prophet Muhammad (peace be upon him) as your sticks:
“That which is lawful is clear and that which is unlawful is clear and between the two of them are doubtful [or ambiguous] matters about which not many people are knowledgeable. Thus, he who avoids these doubtful matters certainly clears himself in regard to his religion and his honor. But he who falls into the doubtful matters falls into that which is unlawful like the shepherd who pastures around a sanctuary, all but grazing therein..”
Note: This article is based on the personal opinion of the author, and by no way a fatwa on the bitcoin issue.
