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Muslims at the Crossroads of Cryptocurrency: A Test of Faith or a Financial Revolution

The world of Bitcoin and cryptocurrency is stirring up deep discussions and diverse opinions within the Muslim community, a compelling development observed by scholars, religious leaders, and followers alike.

Zimbabwean Muslim scholar Ismail ibn Musa Menk, who enjoys a wide international following through his online videos, once quipped, “You know why they call it Bitcoin? It bit us all. I got bitten too, you know.” This cryptic remark immediately sent social media into a frenzy, with speculation rife about whether he had dabbled in the crypto world.

Not all Muslim scholars share the same open-mindedness, however. In contrast, Shawki Allam, Egypt’s grand mufti, has vocally denounced Bitcoin. He endorsed an Egyptian government ban on Bitcoin trading in 2018, issuing a fatwa declaring cryptocurrency haram (forbidden).

The question of whether cryptocurrencies align with Islamic law remains contentious, with a clear divide among scholars. Those in favor argue that cryptocurrencies are permissible because they do not generate riba (interest), which is deemed haram. Detractors, however, caution Muslims against engaging in high-risk gharar (speculation), which they associate with the volatile crypto market.

The lack of consensus among Muslim scholars has not stopped the cryptocurrency market from booming in the Middle East and North Africa. In fact, according to Chainalysis, a New York-based data firm, this region was the fastest-growing cryptocurrency market in the world last year, with Egypt, facing inflation and currency devaluation, at the helm.

Governments in the region are also taking note. Bahrain, an early adopter, issued the first regulatory license to a cryptocurrency exchange, Rain, in 2019 and declared it sharia-compliant. The United Arab Emirates (UAE) is emerging as a regional crypto hub, with Islamic Coin, a local cryptocurrency backed by ruling-family members, set to be publicly traded. The founders of Islamic Coin assert that it’s the world’s first “100% halal” cryptocurrency, pledging 10% of any issued amount to Muslim charity. A validating fatwa backs their venture, further fueling discussions among tech-savvy Muslims about whether a new, religiously endorsed coin holds more merit in the eyes of Allah than conventional currencies.

This riveting dichotomy of opinions has created a buzzing discussion on the intersection of Islamic law and the burgeoning world of cryptocurrencies. It remains to be seen how this debate will shape the future of digital currencies in Muslim countries.

The original article appeared in the Economist Magazine under the title – Does Islam smile on cryptocurrency?

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