Bitcoin Declared Sharia Compliant, Opening Crypto Markets to Islamic Finance
“The use of any lawful thing for an unlawful purpose can not make the thing itself unlawful.” So concludes Indonesia’s Blossom finance, ending a debate in the Islamic world and perhaps even more widely.
A couple of Sheiks had previously argued that bitcoin is not sharia compliant because it can be used by criminals, or, echoing general criticisms, because it is volatile, but Matthew J. Martin, CEO of Blossom Finance, says:
“Rulings by Islamic scholars that claim Bitcoin is not permissible because it is subject to fluctuation and/or has the potential for use in illegal activities are not valid reasons under Shariah, since these factors are external to Bitcoin: the price of bitcoin is subject to supply and demand, just like commodities and fiat currencies, and the use of any lawful thing for an unlawful purpose can not make the thing itself unlawful.”
It remains to be seen whether this ends the debate in the Islamic world where sheiks are discussing whether cryptos comply with the ancient sharia law, but Martin says:
“Blockchain proves ownership of the asset – it proves you actually have the money you’re sending in a transaction.
Conventional banking literally loans money into existence, and that is completely incompatible with the Shariah principles of money…
Blockchain gives you mathematical proof of ownership and that’s overall much more in line with the spirit of Islamic finance than any digital fiat money.”
Like most religious laws, Islamic law prohibits usury, which currently is the foundations of the debt based modern financial system.
Cryptos, however, are not created through debt, but are instead an actual real thing, like an apple, or a dinar coin, or in this case a piece of code which can not be faked and can not be replicated.
As one would have expected, at least for Indonesia, that makes bitcoin even more appealing than current money as far as sharia law is concerned.
Yet in some muslim countries, particularly in Egypt, clerics have merely apparently regurgitated government policy with the same old arguments which amount to little less than criminals use cars, therefore cars are illegal.
However, the vastly muslim Indonesian country comes from a more intellectual strand of Islam making their analysis somewhat more objective and unbiased.
That may have assisted with their stupendous growth in recent years, with Indonesia’s $3.5 trillion yearly GDP making their capital, Jakarta, and some of the other neighboring capitals, an inspiring showcase of a very fast evolving 21st century future.