Many people do not look at crypto as currencies. Instead, they are interested in investing for the long term in certain crypto projects for the technology and use case of that particular project.
Our view is that investing in crypto is halal as long as the project itself is halal.
There is some nuance when it comes to analysing which cryptos are halal and the different opinions that are held. You can check out a more detailed article here on the permissibility of crypto. We also have an article covering the differing views of the permissibility of crypto.
We have also compiled a table of the major coins, including altcoins, and whether or not they are halal which you can find at the bottom of the page.
Whenever you invest, you should ask yourself about the risk levels associated with that investment. Crypto sits in the high risk column of investments.
As with anything which is high risk, you need to be comfortable with the fact that your investment may significantly underperform and you could be sat on losses of 70% or more. On the flip side, if your investment pays off, crypto has shown that you can make lucrative returns of 10x or more.
The key thing when decided how much to invest in crypto is to only put an amount that you would be comfortable losing. That way, even if you come up against a turbulent time in crypto, you can ride it out over time or simply sell and accept your reduced capital.
If you've decided that you want to invest in crypto, you will need to open an account with a crypto exchange. These work in a similar way to online stocks and shares platforms but instead of buying and selling shares, you buy and sell crypto.
There are platforms such as Revolut or Paypal which will allow you to transact certain crypto coins. There are also other specialists brokers, such as Coinbase and Binance, that will allow you to trade a wider variety of coins.
Here's our crypto broker comparison article.
Unlike investing, trading involves the short-term buying and selling of crypto. As long as you are taking ownership of the digital asset itself, short-term trading is perfectly halal.
Many people do not look at crypto as currencies. Instead, they are interested in investing for the long term in certain crypto projects for the technology and use case of that particular project.
Our view is that investing in crypto is halal as long as the project itself is halal.
There is some nuance when it comes to analysing which cryptos are halal and the different opinions that are held. You can check out a more detailed article here on the permissibility of crypto. We also have an article covering the differing views of the permissibility of crypto.
We have also compiled a table of the major coins, including altcoins, and whether or not they are halal which you can find at the bottom of the page.
Whenever you invest, you should ask yourself about the risk levels associated with that investment. Crypto sits in the high risk column of investments.
As with anything which is high risk, you need to be comfortable with the fact that your investment may significantly underperform and you could be sat on losses of 70% or more. On the flip side, if your investment pays off, crypto has shown that you can make lucrative returns of 10x or more.
The key thing when decided how much to invest in crypto is to only put an amount that you would be comfortable losing. That way, even if you come up against a turbulent time in crypto, you can ride it out over time or simply sell and accept your reduced capital.
If you've decided that you want to invest in crypto, you will need to open an account with a crypto exchange. These work in a similar way to online stocks and shares platforms but instead of buying and selling shares, you buy and sell crypto.
There are platforms such as Revolut or Paypal which will allow you to transact certain crypto coins. There are also other specialists brokers, such as Coinbase and Binance, that will allow you to trade a wider variety of coins.
Here's our crypto broker comparison article.
Unlike investing, trading involves the short-term buying and selling of crypto. As long as you are taking ownership of the digital asset itself, short-term trading is perfectly halal.
In short, staking is a way of generating a return on your crypto. In a nutshell, you offer up your crypto to be locked up in a smart contract and in return for you doing so, you get rewarded. Your coins get put to work by the system and they're needed to help the system to achieve consensus. The reward is typically additional coins of that coins you have staked which you can then sell for cash if you so wish.
There are different ways of earning yield on your crypto and we've gone into the whole thing in some detail in this guide.
It can be, yes. There are different terms such as yield farming, liquidity mining, lending, staking, yield farming and they all have different technical meanings.
We highly recommend a good thorough read of this guide if you are serious about earning on your crypto.
Yes, please see the bottom of the page.
Zakat on Crypto is a topical question. You can calculate your zakat on crypto here plus you get a free portfolio health check too.
Please see this fatwa comparison.
Bitcoin/crypto is a high-risk high-reward investment. See this guide to these kind of investments and what other options are available out there.In particular, we do recommend you check out venture capital investing in early-stage technology startups. You can learn about this investment class for free on our Ultimate Startup Course and you can hear about cool investment opportunities in this space when you join our angel investor syndicate: IFG.VC .
You should check out out Crypto FAQ and articles compendium here.
We noticed there isn’t (yet) an official sharia standard for cryptocurrencies. So to help everyone out, we are sharing our own sharia screening of the top 50 cryptocurrencies. This is a live list that will be added to inshAllah.
To be clear – while this list has been reviewed by muftis – this is our own live working draft to guide our own investing. Last updated 9 December 2021.
By the way – we’re launching an IFG Crypto Course with a mufti. Sign up to the waitlist below.
Rank | Name | Ticker | Type | Halal? | Whitepaper Link | Sharia Analysis | Where can I buy it? | IFG Holding |
---|---|---|---|---|---|---|---|---|
1 | Bitcoin | BTC | Cryptocurrency | Yes | here | BTC is a straightforward cryptocurrency and has been deemed permissible by many scholars (though some do disagree. See this article). It is best understood at this point as a digital asset (as opposed to a currency just yet) and as such delayed delivery/receipt of BTC is permissible. | here | Yes |
2 | Ethereum | ETH | Cryptocurrency | Yes | here | Similar analysis to BTC | here | Yes |
3 | Tether | USDT | Stablecoin | Yes | here | Although it's backed by interest bearing instruments, it cannot be said that the owner of USDT is the actual owner of a portion of a debt. The reserve is created with the objective of supporting the currency and network and not with the aim of transferring debts to a third party. | here | Yes |
4 | XRP | XRP | Cryptocurrency | Yes | here | Similar analysis to BTC | here | Yes |
5 | Litecoin | LTC | Cryptocurrency | Yes | None | Similar analysis to BTC | here | No |
6 | Bitcoin Cash | BCH | Cryptocurrency | Yes | here | Similar analysis to BTC | here | No |
7 | Cardano | ADA | Cryptocurrency | Yes | here | Similar analysis to BTC | here | Yes |
8 | Polkadot | DOT | Cryptocurrency-Adjacent | Yes | here | The DOT token is simply an agnostic token that allows you to transact within the Polkadot ecosystem however the idea is that lots of external third parties can plug and use this ecosystem to transact. Fundamentally, the more people use this ecosystem, the greater the liquidity and demand for the DOT token. One point to bear in mind from a sharia perspective is if one ecosystem becomes overwhelmingly linked with a haram industry then there may be an issue. However right now its all too early to make such a judgement call. | here | Yes |
9 | Chainlink | LINK | Cryptocurrency-Adjacent | Yes | here | Similar analysis to DOT | here | No |
10 | Binance Coin | BNB | Cryptocurrency | Yes | here | Similar analysis to BTC | here | Yes |
11 | Stellar | XLM | Cryptocurrency-Adjacent | Yes | here | Similar analysis to DOT | here | No |
12 | USD Coin | USDC | Stablecoin | Yes | here | Similar analysis to USDT. | here | No |
13 | Wrapped Bitcoin | WBTC | Cryptocurrency | Yes | here | Similar analysis to BTC | here | No |
14 | Bitcoin SV | BSV | Cryptocurrency | Yes | here | Similar analysis to BTC | here | No |
15 | Monero | XMR | Cryptocurrency | Yes | here | Monero is a privacy-focused coin, so you can't see source, amount destination as an outsider, which, inevitably, has seen strong uptake from criminal elements. From a sharia perspective there is nothing technically wrong with holding a coin that others use for criminal enterprises, however from a taqwa perspective we would be uncomfortable adding liquidity and value to a currency that is gaining most of its traction by the degree of uptake it is getting in the criminal world. | here | No |
16 | EOS | EOS | Cryptocurrency | Yes | here | Similar analysis to BTC | here | No |
17 | TRON | TRX | Cryptocurrency | Yes | here | Similar analysis to BTC | here | No |
18 | NEM | XEM | Cryptocurrency | Yes | here | Similar analysis to BTC | here | No |
19 | Tezos | XTZ | Cryptocurrency | Yes | here | Similar analysis to BTC | here | No |
20 | Theta | THETA | Cryptocurrency | Yes | here | THETA aims to reward users with THETA tokens for opening up their free CPU resource so that video streaming services can be provided without lag or glitches etc. The underlying issue is that last-mile-delivery on video streaming is poor and THETA can help provide the computational resource to help solve that. This is all fine. Where it gets a little bit greyer is THETA being used within the video ecosystem itself. Ultimately my view is that this is fine too, but one to keep an eye on, in case THETA suddenly has mass adoption by illicit streaming sites etc. | here | Yes |
21 | Neo | NEO | Cryptocurrency | Yes | here | Similar analysis to BTC | here | No |
22 | VeChain | VET | Cryptocurrency | Yes | here | Similar analysis to BTC | here | No |
23 | Crypto.com Coin | CRO | Cryptocurrency | Yes | here | CRO broadly has a similar analysis as that applied to BTC. | here | No |
24 | Uniswap | UNI | DeFi | Yes | here | UNI is a token for a project that essentially doubles up as a broker-less crypto exchange platform. Think coinbase, but automated and without a central clearing authority. So far so good. But the issue here is that UNI structure relies on people to contribute in their coins and get paid a fee for this into the system to provide liquidity. Exchanging using Uniswap itself is fine. But that is not the question here. The question is whether UNI itself is inextricably structured to be used in a way that ends up being sharia-non-compliant. The key issue is the contribution of coins to provide liquidity. Either we view this as some form of lending out or we see it as taking an equity-like position or revenue-sharing position that someone. On the basis that fundamentally each contract does not diminish with each exchange rather it is balanced out with the new coin that is entered in we consider uniswap to be using a form of revenue-sharing or taking mini-equity-like positions in each Exchange Contract. | here | No |
25 | Aave | AAVE | DeFi | No | here | AAVE is a lending ecosystem designed to help holders of cryptocurrency lend their coins out for a higher return. The crucial thing here is that a cryptocurrency is borrowed and then more of that cryptocurrency is returned. That is straightforwardly riba and not permissible. AAVE itself is not a haram asset per se, but our cautious view is that it is so inextricably linked up in its very origination as something that gets value from lending activity, that it is not something to support by even holding AAVE. | here | No |
26 | Synthetix | SNX | DeFi | No | here | The entire basis for SNX is to enable the Synthetix ecosystem which is a derivatives trading system. Derivatives are not permissible according to most Islamic scholars and doing it via a DeFi model doesn't fundamentally change the fiqhi analysis. | here | No |
27 | Maker | MKR | DeFi | No | here | Maker operates a dual token system MKR which is a governance token. And DAI which is a token created out of loans made by the platform to the users. The interest on these loans are paid through the stability fee. This stability fee should not be confused with a maintenance fee or service fee for using the Maker Vault. It is clear that the crypto deposits are used as collateral for borrowing DAI. Hence, if the collateralization ratio drops below one hundred and fifty percent the traderÕs collateral will be liquidated to pay off their loan. The platform is used to generate interest based loans, hence creating DAI and owning MKR are not shariah compliant. | here | No |
28 | UNUS SED LEO | LEO | Cryptocurrency | Yes | here | The native token of the bitfinex exchange. They reward you with discounts on their platform based on how much LEO you own. There is nothing problematic with these kinds of rewards for holding such a utility token. | here | No |
29 | Dai | DAI | Stablecoin | Yes | here | While the creation of DAI might have some discussion over it, it is fundamentally a cryptocurrency and there isn't anything obviously problematic about using it. The Dai Savings Rate however is a separate concept that we have not commented on here. | here | No |
30 | Dash | DASH | Cryptocurrency | Yes | here | Similar analysis to Monero | here | No |
31 | Cosmos | ATOM | Cryptocurrency | Yes | here | A nice simple vanilla crypto token with staking and governance rights - nothing problematic here. | here | No |
32 | Celsius | CEL | DeFi | No | here | The entire purpose of CEL tokens is to allow people to lend USD or other cryptocurrencies and for others to borrow that on interest. While technically, like for most of the interest-based lending crypto projects, it is possible to hold the token without earning interest or donating it, the entire premise of the project is interest-based lending. Best avoided. | here | No |
33 | Dogecoin | DOGE | Cryptocurrency | Yes | here | Similar analysis to BTC. | here | No |
34 | Zcash | ZEC | Cryptocurrency | Yes | here | Similar analysis to Monero | here | No |
35 | Binance USD | BUSD | Cryptocurrency | Yes | here | It is fully backed by USD. No fiqhi issues with that. | here | No |
36 | IOTA | MIOTA | Cryptocurrency | Yes | here | IOTA is a token used to power the technology ecosystem that IOTA have created. Nothing to suggest any issues with this. | here | Yes |
37 | Revain | REV | Cryptocurrency | Yes | here | REV is the token that can be used in the REVAIN ecosystem - which is a developer reviewing platform. Nothing to suggest any issues with this. | here | No |
38 | Huobi Token | HT | Cryptocurrency-Adjacent | Yes | here | HT is a token of the Huobi Mining Pool - which in turn is set up to mine different cryptocurrencies and earn money that way. | here | No |
39 | Filecoin | FIL | Cryptocurrency | Yes | here | Similar analysis to BTC | here | No |
40 | yearn.finance | YFI | DeFi | No | here | YFI is a token that is specifically designed to interact with a bunch of DeFIs e.g. Aave, dydx and Compound, via its ecosystem. It is building in Yield, interest-based usually, and derivative functionality. | here | No |
41 | Ethereum Classic | ETC | Cryptocurrency | Yes | here | Similar analysis to BTC | here | No |
42 | FTX Token | FTT | DeFi | No | here | This project is bringing leveraged, margin trading, short-selling and the general forex vibe to crypto. Gut instinct is to avoid at all costs. | here | No |
43 | Solana | SOL | Cryptocurrency | Yes | here | View 1 is that although the platform and token can be used in a sharia compliant way, staking might be questionable, if not haram as it involves validating non sharia compliant transactions. View 2 is that the platform is an agnostic thing providing a ledger technology and you are being remunerated for participating in its functioning and as such there is nothing problematic about holding SOL or staking it. This is the IFG view. | here | No |
44 | Compound | COMP | Cryptocurrency | No | here | Similar analysis to Aave | here | No |
45 | Zilliqa | ZIL | Cryptocurrency | Yes | here | Similar analysis to BTC | here | No |
46 | Decred | DCR | Cryptocurrency | Yes | here | Similar analysis to BTC | here | No |
47 | Waves | WAVES | Cryptocurrency-Adjacent | Yes | here | Similar analysis to DOT | here | No |
48 | Elrond | EGLD | Cryptocurrency | Yes | here | Similar analysis to BTC | here | No |
49 | Kusama | KSM | Cryptocurrency-Adjacent | Yes | here | Similar analysis to DOT | here | No |
50 | SushiSwap | SUSHI | DeFi | No | None | This is one where we have changed our position. While the SUSHI project is a fork of UNI, it goes much further. The SUSHI token actually remunerates the holder across all activity in the SUSHI ecosystem. This ecosystem involves lending and the staking and pooling of haram coins. Accordingly, it would be best to avoid holding SUSHI, though, pooling on it isn't an issue as long as it is with halal coins. | here | No |
51 | Hedera Hashgraph | HBAR | Cryptocurrency-Adjacent | Yes | here | Similar analysis to BTC | here | Yes |
52 | Horizen | ZEN | Cryptocurrency | Yes | here | Similar analysis to Monero | here | No |
53 | Verge | XVG | Cryptocurrency | Yes | here | Similar analysis to Monero | here | No |
54 | Algorand | ALGO | Cryptocurrency | Yes | here | Similar analysis to BTC | here | No |
55 | Avalanche | AVAX | Cryptocurrency-Adjacent | Yes | here | Similar analysis to DOT | here | No |
56 | UMA | UMA | DeFi | No | here | Similar analysis to SNX | here | No |
57 | Ontology | ONT | Cryptocurrency-Adjacent | Yes | here | Similar analysis to DOT | here | No |