Skip to content

Is crypto trading Halal or Haram?


The global cryptocurrency trading market was around USD535bn in 2017, according to Zion Market Research.  Values dropped significantly in 2018 following a crypto-crash, but it was back up to USD1.5 trillion in 2021 and USD2.5 trillion in 2024. The market is expected to grow at around 8% up to 2028.

Currently 1.9bn of the world’s population is Muslim, a number expected to grow to over a quarter of the world’s population by 2030.

The crypto market has been a growing phenomenon since Bitcoin’s emergence in 2009 and subsequent replication by a plethora of other blockchain-backed cryptocurrencies. Crypto trading was enthusiastically adopted by scores of tech-savvy, often young people who used it both as a transactional asset, a store of wealth and a speculative investment.

One major attraction of digital currencies such as Bitcoin, Ethereum and others is that they operate independently of central banks and governments. They rely on encryption techniques to regulate the generation of units of currency and verify the transfer of funds, something discussed on our podcast with Alan Vey of Aventus Network.

Some analysts believe that cryptocurrency will become an alternative, almost shadow, global currency that will run alongside regulated, fiat currency. Governments have taken note, and various nations are collaborating on the development of a Central Bank Digital Currency.

Rapid growth of Islamic finance

The Islamic finance market, in the modern sense, went through a renaissance starting in the 1950s with the foundation of a bank in Pakistan that complied with Islamic principles. The experiment was repeated in rural Egypt, bringing financial services to the unbanked.

In the 1970’s, with the rapid rise in wealth in the Persian Gulf, the Islamic banking sector experienced a spectacular expansion driven by the foundation of the Islamic Development Bank.  The sector has grown to USD4.5 trillion in 2024.

Both markets represent big numbers, and in the Venn Diagram of global finance eventually Islamic finance will cross into the territory of crypto trading and vice versa. However, the issue of whether crypto trading is Halal under Islamic Finance’s strict rules is a hot topic.

Is crypto trading Halal or Haram?

Islamic finance is a financial system that runs on an interpretation of Islamic Law, or Shari’ah. Some activities are ‘permissible’ or ‘Halal’, and others are ‘prohibited’ or ‘Haram’. Shari’ah law is based on the Q’ran, the Sunnah, or teachings and practices of Prophet Mohammed, and the consensus of Islamic scholars. It is a comprehensive system of laws that covers all aspects of life, including economics and finance.

The big no-no’s in Islamic finance are ‘riba’ and ‘gharar’. Riba is interest, and in Islamic finance the charging or paying of interest is deemed Haram. This is because riba is considered exploitative and leading to inequality in society.

Islamic finance also proscribes certain activities, and businesses that engage in these activities.  For example, the production and sale of alcohol; the production and sale of pork products; gambling, tobacco and pornography are all deemed Haram.

Prohibition of gharar

The other main pillar of Islamic finance is the prohibition of ‘gharar’, or uncertainty. Islamic finance prohibits investments that involve excessive uncertainty or risk. This is because gharar can lead to gambling and speculation which, as we have seen, is Haram.

And this is where cryptocurrency hits a wall in terms of acceptability to Muslims, as cryptocurrency is considered to be highly speculative and volatile. Given its speculative nature – it has evolved from a transactional vehicle and store of wealth, like gold, to a speculative ‘money-making’ opportunity – crypto in its current form falls foul of the gharar prohibitions under Shari’ah. Potentially CBDCs could be different as the value of the digital currency is backed by the wealth and assets of a nation.

Again, as with many of the issues in financial markets over the last few decades, including short-selling, derivates, hedging, gearing and leverage, it depends which scholar you ask as to what answer you can expect as to the legality, under Shari’ah, of various financial structures, transactions and products. And Islamic finance has proved time and again that it can find mechanisms to adapt and engineer existing financial products that give transactions a veneer of Shari’ah compliance.

Proponents of crypto in the Islamic finance marketplace say crypto trading is Halal as the currencies serve as a transactional medium of exchange for the purposes of purchasing legitimate goods and services. They also cite crypto’s ability to increase financial inclusion and reduce corruption and fraud. They also say that crypto’s decentralized nature decouples users from governments and inter-state actors that may or may not have the benefit of the Ummah (the Muslim population) at heart and may or may not be involved in corrupt or illegal activities.

However, scholars on the other side of the debate argue crypto trading is Haram as it doesn’t have intrinsic value and is not backed up by real, physical assets. They also say that although crypto does promote financial inclusion and help fight fraud, it is also a medium for illegal activity including money laundering, drug trafficking and financing of terrorism due to its faceless, anonymous, somewhat shadowy nature.

Dancing around the gharar issue

Supporters in the Islamic finance sector try to dance around the gharar issue claiming that, although crypto can fluctuate wildly in value, it is no different in terms of uncertainty and risk to other Halal transactions in commodities, equities and fiat currency.

The biggest stick that crypto’s opponents in the Islamic finance industry have to beat it with is gharar, and if you’ve been trading crypto over the years you’ll have experienced the rollercoaster ride various coins have taken. They say that crypto trading is undeniably speculative, verging on spinning a roulette wheel or turning a card over in a casino.

It comes down to an issue of interpretation. The Islamic finance industry is a broad temple, and various different schools of Islamic jurisprudence interpret Shari’ah in slightly different ways. However, the issue of gharar and fact that most cryptocurrencies aren’t asset-backed is a major obstacle to the wholesale adoption of crypto trading as Halal in Islamic finance.

Islamic Trading Accounts

Broker The Armchair Trader says:

Pepperstone logo

deposit: £100

Pepperstone provide a strong focus on the trading experience. They offer industry leading technology, low costs and award-winning client support. We feel that Pepperstone’s Swap Free Account is a good option for the more established high volume day trader.

FP Markets logo

deposit: $100

FP Markets is an established ASIC & CySEC regulated broker. Their Islamic Account offers access to the industry leading MetaTrader platforms. There is also a copy trading service. Importantly, they provide pricing directly from the market meaning fast execution and transparent pricing. A 24/7 multilingual client support service has won recognition through the highly respected Investment Trends awards..
FxPro - CFDs and FX

deposit: $100
FxPro is a fully regulated CFD provider offering Swap-Free Trading on Indices, Futures, and Stocks. Clients have access to over 2000+ financial instruments and the company serves clients in 173 countries worldwide. FxPro was voted ‘Best Forex Provider’ by The Armchair Trader readers for 2024.

Looking for great investing ideas? Sign up to our free newsletter.

Join us on WhatsApp

This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

'How to' Guides

Our latest in-depth company reports

Detailed reviews of selected companies and investment trusts.

On the podcast

Sign up for great investing stock tips

Thanks to our Site Partners

Our partners are established, regulated businesses and we are grateful for their support.

CME Group
FP Markets
Back To Top