Digital Currency under the Perspective of Islamic Law

Abstract

Fatwa Number: 28/DSn-MUI/III/2002 regulates the sale and purchase of money in the fatwa which reads: Currency buying and selling transactions are basically allowed, provided that: Not for chancy (speculation), just in case (savings), the transaction needs if the currency transactions are of the same type, they must be of the same value and cash. If different types, it must be based on the exchange rate at the time of transaction and cash delivery. The concept of digital currency for buying and selling transactions has met the requirements and pillars. However, in the mechanism, there is an element of ambiguity. Its nature and form is unknown (jahalah), which is contained in the software. The use of digital money is also seen as having many disadvantages. The reason is that when the price goes up, this digital money will be sold, and even the price can go up to zero. Here there is a dark side that is to draw fate and make a profit. So to avoid harm, this digital money is not recommended to be used.

Islamic legal perspectives on digital currencies and how they apply to Jordanian legislation

“…Then, buying and selling digital currency must follow the same rules, standards, and pillars as buying and selling physical currency. 62 , 63…”

“…Avoid spending too much money, and do not use it to buy things against Islamic law. 62 Buying Bitcoin, Dogecoin, and other digital currencies with fiat money is almost the same as buying currency with currency. There are two rules governing currency exchange: first, if it is the same type of item, the scale (quantity) must be the same, and payment must be given in cash.…”

“…Then, buying and selling digital currency must follow the same rules, standards, and pillars as buying and selling physical currency. 62,63 To be compliant with Islamic law, a financial system must have the following requirements: It should be interest-free (Interest prohibition (IP), which implies neither interest on debt shall be requested nor paid. It should be transparent and straightforward (no misrepresentation) so as not to deceive their trading partners.…”

Islamic legal perspectives on digital currencies and how they apply to Jordanian legislation

“…Avoid spending too much money, and do not use it to buy things against Islamic law. 51 Buying Bitcoin, Dogecoin, and other digital currencies with fiat money is almost the same as buying currency with currency. There are two rules governing currency exchange: first, if it is the same type of item, the scale (quantity) must be the same, and payment must be given in cash.…”

“…Then, buying and selling digital currency must follow the same rules, standards, and pillars as buying and selling physical currency. 51,52 To be compliant with Islamic law, a financial system must have the following requirements: It should be interest-free (Interest prohibition (IP), which implies neither interest on debt shall be requested nor paid. It should be transparent and straightforward (no misrepresentation) so as not to deceive their trading partners.…”