THE LEGALITY OF CRYPTOCURRENCY AND BLOCKCHAIN TECHNOLOGY IN ISLAMIC LAW
Abstract
The rapid rise of cryptocurrency and blockchain technology has sparked significant debate regarding its compatibility with Islamic law (Sharia). This essay explores the legality of cryptocurrency within the framework of Islamic finance, focusing on key principles such as the prohibition of riba (usury) and gharar (excessive uncertainty). Cryptocurrency, as a decentralized digital currency, challenges traditional financial systems and raises questions about its adherence to Sharia-compliant practices. The study examines the fundamentals of Islamic law, including its sources Quran, Hadith, Ijma (consensus), and Qiyas (analogical reasoning) and how they apply to modern financial innovations. It also discusses the ethical and moral considerations of Islamic finance, emphasizing risk-sharing, transparency, and social justice. The essay reviews existing fatwas and rulings on cryptocurrency, highlighting the divergent views among Islamic scholars. Additionally, it analyzes the regulatory frameworks in Islamic jurisdictions and the challenges of integrating cryptocurrency into Islamic finance. The study concludes that while cryptocurrency presents opportunities for innovation, its compatibility with Sharia depends on addressing issues such as volatility, speculation, and compliance with Islamic financial principles. The essay calls for further scholarly research and collaboration to develop Sharia-compliant frameworks for cryptocurrency and blockchain technology.
Keywords: Cryptocurrency, Blockchain Technology, Islamic Law, Sharia Compliance, Riba, Gharar, Islamic Finance, Fatwa, Risk-Sharing, Decentralized Finance
