Recently published study declares Bitcoin compliant with shariah laws
This past April, the firm Blossom Finance based in Indonesia, published a 22-page working paper that declares Bitcoin and other cryptocurrencies compliant with Islamic financing or Shariah Law. The news comes at a time when a great majority of Muslims and clerics have been uncertain about whether or not bitcoin falls under the rules of Islamic banking and helps solidify the cryptocurrency among Islamic participants who have invested. According to the Islamic microfinance company, Blossom Finance, virtual currencies do qualify as Islamic money, unless it is banned by the local government.
For a few years now many Muslims have discussed whether or not Bitcoin falls under the criteria of Islamic Banking or Shariah Law. Islamic Finance has a set of specific rules which people follow when conducting business; such as the strict edict not to engage in usury or collecting interest off of loans. To get a better understanding of how cryptocurrencies apply to Bitcoin, Mufti Muhammad Abu-Bakar from Blossom Finance researched the subject in the working paper called: “Shariah Analysis of Bitcoin, Cryptocurrency, and Blockchain.”
Bitcoin halal or Bitcoin haram? it depends:
Matthew J. Martin, the founder of the startup Blossom Finance states in a recent press statement that many individuals have asked him whether or not ‘Bitcoin halal or haram?’ Martin explains that the most honest answer is that it “depends,” as bitcoin is both a transaction and payment network. But the firm’s 22-page paper declares that “bitcoin does qualify as Islamic money, except where it is banned by a local government.” Mufti Muhammad Abu-Bakar details in the study that there are three regulatory jurisdictions which apply:
Jurisdictions where the usage of cryptocurrency is prohibited and banned explicitly. In such jurisdictions, it is not allowed to deal with cryptocurrency.
Jurisdictions where regulators are silent, or have not explicitly acknowledged or declared cryptocurrency as permissible money; often in these jurisdictions, the regulators merely warn the public to exercise caution and be aware of the risks involved.
Jurisdictions where regulators have accepted cryptocurrency either as a financial asset or as an alternative currency and have enacted specific legislation that permits the public to utilize cryptocurrency.
“From Shariah point of view, it is permissible in the last two types of jurisdictions to deal with bitcoin and other qualified cryptocurrencies,” explains the paper’s author. “However, the preservation and protection of wealth is one of the fundamental objectives of Shariah ( Maqasid al-Shariah ) — Therefore, it is necessary for cryptocurrency users to take care of its related risks.”
The Blossom paper emphasizes that Bitcoin and other cryptocurrencies qualify under Shariah Law because they can be considered “customary money,” and only local law can supersede the digital assets permissibility. For instance in some countries Bitcoin is a permissible currency or commodity according to the region’s financial laws. This makes virtual currencies compliant with Islamic finance in that area. Although in Egypt the top Islamic cleric had issued a ‘fatwa’ (edict) against bitcoin so making sure its permissible by local law is recommended.
The verdict about ICOs is different:
The 22-page research paper is a great educational resource for Muslims and those who follow the rules of Islamic banking. In fact, Mufti Muhammad Abu-Bakar concludes in the paper that it is “advisable to utilize cryptocurrency networks as a payment system in the cases where cryptocurrency networks offer specific benefits and advantages over conventional systems.” However, the author does warn that Initial Coin Offerings (ICOs) may not be seen as compliant with Shariah Law and ICOs are outside the scope of permissibility as far as the research paper is concerned. Blossom Finance plans to release a working paper dedicated to the ICO phenomenon in a separate study. For a more in-depth analysis on whether or not Bitcoin is Halal or Haram check out the research paper published by Blossom Finance, which can be read and downloaded here.
How to Buy Bitcoin?
Coinmama allows people in over 188 countries around the world, buy bitcoin (BTC) with any debit or credit cards issued by MasterCard or VISA. This is perhaps the fastest and simplest way to buy bitcoin. In most cases, you’ll get your bitcoins in less than half an hour.
Additionally, eurpoean residents may use our SEPA bank transfer method to buy Bitcoin. This option allows you to purchase bitcoins with Euros via any SEPA region bank account. The only rule to keep in mind is that the bank account must be registered in your own name. Bank transfers have lower fees and higher limits than card purchases but aren’t as quick. Sometimes the process can take as two business days.
Whichever method you decide on, here’s how to go about buying your BTC from Coinmama, in 4 easy steps:
Step 1 - Create Your Coinmama Account:
Head to the Coinmama website and select the blue “Sign Up” tab from the top menu.
Next, please provide us with your email, desired password (be sure to record it safely), first and last name, as well as your country of residence.
If you already have an account, just sign in with your existing login details.
For more information on how to create an account with us, click our support page here.
Step 2 - Verify Your Account:
To purchase bitcoin (BTC), you first need to become verified.
It’s necessary to upload your ID or passport, plus various other documents depending on which level of verification you wish to reach.
For further help with account verification, please click here.
Step 3 - Purchase Your Bitcoin:
Once signed in and verified, navigate to the “Bitcoin” tab in the top menu bar.
Once there, you will be presented with several choices: either purchase a set amount of BTC, or enter in a custom amount of up to roughly $5,000 (as of the time of writing) for card purchases or $12,000 for SEPA purchases. You can also choose to price BTC against EUR or USD.
Supply your Bitcoin wallet address. If you’re unsure what this is, please check out this article. The address you enter is where we’ll send the coins which you buy. You can re-use this address for subsequent purchases or get a new one from your wallet, at your discretion.
Next, select the “Go to Payment” button.
Step 4 - the Checkout Page
Complete the form with your relevant details. Make sure that your card or banking details, such as your name, correspond with the details you supplied when creating your Coinmama account.
Finally, proceed to payment by clicking on the “Pay now” button. For card purchases, kindly note that only cards issued by VISA or MasterCard are accepted.
Once your card payment has been made, the order status will read “In Process.” This means that your order is being processed by the bank or card company. Credit card orders will be processed within minutes but SEPA transfers may up to two business days. When paying via SEPA, note that you will get the BTCEUR rate at the time your money arrives at our account. This means that during times of high price volatility, you may get a rather different Bitcoin amount (either more or less) than expected.
Once payment has been made, our BTC transaction to your wallet’s address then needs to be confirmed by the Bitcoin network. In approximately 10 minutes, a Bitcoin payment will be broadcast from Coinmama’s wallet to the Bitcoin address you supplied in Step 3, point 3.
Note that during times of especially high traffic, your transaction may take longer than normal to appear as confirmed within your wallet. Ordinarily, the transaction will be confirmed within 10 minutes.
For large amounts, it’s recommended that you wait for up to 5 more confirmations (which should take about an hour). You may then regard the transaction as final and spend your new coins.