Cryptocurrencies and Islamic Law – love or hate relationship?

By Ruslan Saleev,


It is time to accept it – cryptocurrencies are here and they are disrupting the financial sector. It is as disruptive as fiat currencies (currencies that are not backed by gold or silver, e.g. US dollar since 1971), credit cards, and options once were.

Since Islamic law is highly dependent on fatwas (legal opinions of Shariah experts), the ultimate fate of cryptocurrencies – whether it is haram, and hence impermissible, or halal, and hence Shariah-compliant – will be determined by such a fatwa.

Grand Mufti of Egypt Shaykh Shawki Allam, the Turkish Government, Fatwa Center of Palestine, and UK-based scholar Shaykh Haitam all think that Bitcoin, one of the most popular cryptocurrencies, is haram[1]. Among the arguments that they operate with are: there is no central authority that monitors the cryptocurrency, it is open to speculation (and hence, there is excessive gharar – uncertainty, hazard), the cryptocurrency not being backed by anything, and even used in illegal activities[2].

Muneer Khan, head of Islamic finance and Middle East practices at Simmons and Simmons, on the other hand, claims that there might be a misunderstanding of the nature of cryptocurrencies by the scholars and Shariah experts due to the lack of knowledge in the area of modern-day finance and technology[3].

Qatar University professors and researchers agree with Khan on that. They criticize the opponents of cryptocurrencies by arguing that, for example, gold, which is Shariah-compliant, does not have a central authority either and that its price is volatile, too[4]. Moreover, just like fiat currencies, which are generally regarded as Shariah-compliant, cryptocurrencies depend on public acceptance and confidence[5].

The third view is somewhat in the middle – the fatwa center of South African Islamic seminary is of a view that cryptocurrencies, such as Bitcoin, fulfill the conditions of maal (property) – the main argument is that it has been accepted through general societal concurrence (urf, customary practice) – and hence it can be traded. Nevertheless, the center claims that in order to be considered a currency, relevant governmental bodies have to approve it first[6].

Not all cryptocurrencies are considered to be haram even by their general opponents. OneGram was the first cryptocurrency that has been certified in compliance with Shariah. Among other reasons, it is accepted by the Shariah experts due to the fact that it is backed up by gold and 2,5% of profits from OneGram transactions go to their charity (thus fulfilling the requirements of zakat, one of the five pillars of Islam)[7].

As can be seen from the arguments presented above, there are many views when it comes to determining whether cryptocurrencies are Shariah-compliant. We can only speculate at this point whether cryptocurrencies are going to gain a wide fatwa recognition – yet, much depends on it, since four of the ten biggest sovereign funds are run by majority-Muslim countries, and large portions of those funds´ investments go into Shariah-compliant assets[8].

[1] Mufti Muhammad Abu-Bakar, “Shariah Analysis of Bitcoin, Cryptocurrency, and Blockchain”, 5 April 2017 < > accessed on 27 February 2023.

[2] Ibid.

[3] Gerrit De Vynck, “Islam has a rich tradition around finance. Crypto is prompting new questions.” (Washington Post, 8 March 2022) < > accessed on 28 February 2023.

[4] Andrew Dahdal, Jon Truby, Otabek Ismailov, “The Role and Potential of Blockchain Technology in Islamic Finance” [2022] 33 European Business Law Review 175, 188 < > accessed on 1 March 2023.

[5] Ibid.

[6] Ziyaad Mahomed, Shamsher Mohamad, “Crypto Mania: The Shariah Verdicts”(Centre for Islamic Asset and Wealth Management, 2017) < > accessed 1 March 2023.

[7] For more information on OneGram, see < > accessed 1 March 2023.

[8] See supra note (3).

Islamic Financial Principles in the UK: Examining the Legal Basis of Murabaha & the Implications of Applying the ECHR/Equality Act 2010

By Wyon Sandells, 

Edited by Sanaa Kadi

Under the principles of Islamic Finance, the prohibition of riba (usury) reigns supreme due to it going against the Qur’an and Sunnah. As a result, Islamic finance has developed alternative methods to allow investors to profit.

An example of this is Murabaha, which is ‘a sale of an item to a buyer where the seller expressly mentions the cost, they have incurred on the commodities to be sold and sells it to another by adding…[a known] profit or mark-up’.[1]

However, when the customer defaults with English law governing, it is followed instead of Shari’ah, thereby not allowing the buyer to default (while allowed under Shari’ah). This can best be seen in the case of Shamil Bank of Bahrain and Beximco Pharmaceuticals of Bangladesh, where a Murabaha agreement, although containing a clause that said that it would be ‘subject to the principles of the Glorious Shari’ah…[and] governed by and construed in accordance with the laws of England’, the court solely enforced English law, holding that it was not possible to apply Shari’ah.[2]

This, therefore, raises the question of if Shari’ah is not followed, then why does English law govern Islamic financial contracts?

To understand this, it is necessary to state both art.9 of the European Convention of Human Rights (implemented under the Human Rights Act 1998), and s.19 of the Equality Act 2010.
Art.9 allows ‘Everyone…to manifest his religion or belief, in worship, teaching, practice, and observance’, while s.19 prohibits ‘a provision, criterion, or practice which is discriminatory in relation to a relevant protected characteristic’ (Religion and Belief being one under s.10).

Therefore, to ensure an impartial system, since 2001, there have been several UK Government and Financial Conduct Authority (FCA) initiatives to establish English law as an international Islamic financial legal system.[3] An example being a working group that reformed the Finance Act to facilitate Murabaha by removing a double tax charge which taxed both the acquisition and sale of a good.[4]

These reforms lead to the development of an alternative financing system, allowing English legislative and regulatory measures to facilitate Shari’ah-compliant transactions,[5] while also encouraging more ‘investment’ and economic growth at the national level.[6]

However, although the ideas behind this system, originate from Shari’ah, it is still English law, and therefore does not permit the use of Shari’ah’s legal sources. This is by design and not by choice, as the government states that it is ‘a secular regulator’,[7] which ensures that ‘all financial institutions…are subject to the same standards…[regardless of] their religious principles’.[8]

As a result, a paradox exists as, while the government cannot assist in ensuring that transactions are Shari’ah-compliant, its courts are not permitted to enforce Shari’ah law as the governing law. This is to avoid going against the ECHR and Equality Act. However, by refusing to enforce Shari’ah law, the government is effectively prioritizing English law over Shari’ah law, which may be viewed as a violation of the ECHR and Equality Act, thereby creating a complex legal landscape for Shari’ah-compliant finance in the UK.



Fielding S, ‘Mediation in the Church of England: Theology and Practice’ (2010) 13 Ecclesiastical Law Journal 69

REDmoney, The Islamic Finance Handbook (John Wiley & Sons 2014) 535, ‘Practice Guide 69: Islamic Financing’ (GOV.UK) <> accessed on 24th February 2023.


[1] ‘Practice Guide 69: Islamic Financing’ (GOV.UK) <>.

[2] REDmoney, The Islamic Finance Handbook (John Wiley & Sons 2014) 543-544.

[3] REDmoney, The Islamic Finance Handbook (John Wiley & Sons 2014) 540.

[4] REDmoney, The Islamic Finance Handbook (John Wiley & Sons 2014) 540.

[5] REDmoney, The Islamic Finance Handbook (John Wiley & Sons 2014) 541; Stephen Fielding, ‘Mediation in the Church of England: Theology and Practice’ (2010) 13 Ecclesiastical Law Journal 70.

[6] REDmoney, The Islamic Finance Handbook (John Wiley & Sons 2014) 542.

[7] Stephen Fielding, ‘Mediation in the Church of England: Theology and Practice’ (2010) 13 Ecclesiastical Law Journal 73-74.

[8] Stephen Fielding, ‘Mediation in the Church of England: Theology and Practice’ (2010) 13 Ecclesiastical Law Journal 73.

Survey on Islamic Banking in Finland


Tervetuloa vastaamaan Islamilainen pankkitoimintaan suunnattuun kyselyyn!  Kysely on täysin anonyymi ja keräämme nämä tiedot vain tutkimustarkoituksiin. (English below)Toivomme, että jokainen vastaanottaja vastaisi kyselyyn. Kyselyn tavoitteena on saada tietoa kokemuksista ja käsityksistä eri Islamilainen pankki- ja finanssi osa-alueista. Jokaisen vastaus on tärkeä. Arvioinnissa tavoitellaan mahdollisimman kattavaa aineistoa, joten arvioinnin onnistumiseksi toivomme, että vastaajat varaavat kunnolla aikaa vastaamiselle. Kyselyyn vastaaminen vie noin 5-10 minuuttia riippuen siitä, kuinka moneen osioon vastaat.Kiitos, kun osallistut arviointiin! Ystävällisin terveisin arviointiryhmän puolesta! Welcome to take the Islamic Banking Survey! The survey is completely anonymous and we gather this information strictly for research purposes. We hope that each recipient will respond to the survey. The aim of the survey is to obtain information on experiences and perceptions of different Islamic banking and financial disciplines. Everyone’s answer is important. The aim of the evaluation is to have as comprehensive material as possible, so in order for the evaluation to be successful, we hope that the respondents will allow proper time for answering. The survey will take about 5-10 minutes to complete, depending on how many sections you answer.Thank you for participating in the review!Best regards on behalf of the evaluation team! 



مرحبا بكم في إجراء استبيان الصيرفة الإسلامية!  الاستطلاع مجهول تماما ونحن نجمع هذه المعلومات فقط لأغراض البحث.  نأمل أن يجيب كل مستلم على الاستبيان. ويهدف الاستطلاع إلى جمع المعلومات عن الخبرات والتصورات لمختلف جوانب الصيرفة والتمويل الإسلامي. إجابة الجميع مهمة. والهدف من التقييم هو الحصول على أكبر قدر ممكن من المواد الشاملة، ولذلك نأمل أن يخصص المستجيبون وقتا كافيا للرد. يستغرق الاستطلاع حوالي 5-10 دقائق لإكماله ، اعتمادا على عدد الأقسام التي تجيب عليها. شكرا لك على المشاركة في التقييم! مع خالص التقدير ، نيابة عن فريق التقييم!Haye

Ku soo dhowoow qaadashada sahanka bangiyada islaamiga ah!  Daraasaddu gebi ahaanba waa qarsoodi ah, waxaana ku soo aruurinaa macluumaadkan oo keliya ujeedooyin cilmi baaris.  Waxaan rajeyneynaa in qof kasta oo qaata uu ka jawaabi doono daraasadda. Ujeeddada daraasaddan ayaa ah in la uruuriyo macluumaad ku saabsan waayo-aragnimada iyo fikirrada ku saabsan dhinacyada kala duwan ee bangiyada iyo maaliyadda Islaamka. Qof kasta jawaabtoodu waa muhim. Ujeeddada qiimaynta waa in ay noqoto mid dhamaystiran sida ugu macquulsan, markaa si qiimayntaasi ay u noqoto mid lagu guuleysto, waxaan rajeyneynaa in dadka soo jawaabay ay daciifin doonaan waqti ku filan oo ay ka jawaabi lahaayeen. Daraasaddu waxay qaadataa qiyaastii 5-10 daqiiqo in la dhammaystiro, taas oo ku xidhan hadba inta qaybood ee aad ka jawaabto. Waad ku mahadsantahay inaad ka qayb qaadatay qiimaynta! Daacadnimo, oo wakiil ka ah kooxda qiimaynta!Merhaba 


İslami bankacılık anketine katılmaya hoş geldiniz!  Anket tamamen anonimdir ve bu bilgileri yalnızca araştırma amacıyla toplarız. (Aşağıda İngilizce) Her alıcının anketi yanıtlayacağını umuyoruz. Anketin amacı, İslami bankacılık ve finansın çeşitli yönleriyle ilgili deneyimler ve algılar hakkında bilgi toplamaktır. Herkesin cevabı önemlidir. Değerlendirmenin amacı mümkün olduğunca kapsamlı bir materyale sahip olmaktır, bu nedenle değerlendirmenin başarılı olması için, yanıtlayanların yanıt vermek için yeterli zaman ayıracaklarını umuyoruz. Anketin tamamlanması, kaç bölümü yanıtladığınıza bağlı olarak yaklaşık 5-10 dakika sürer. Değerlendirmede yer aldığınız için teşekkür ederiz! Saygılarımızla, değerlendirme ekibi adına!Silav.  


Hûn ê kêfxweş bibin ku beşdarî anketa bankaya Misilman bibin!  Lêkolîn bi tevahî bênav e, û em dikarin vê agahdariyê tenê ji bo xwendina wê bikar bînin. ( Bi îngilîzî di destpêkê de )Em naxwazin her mişterî destekê bidin anketê. Armanca anketê, berhevkirina agahiyan li ser ezmûn û têgihiştinên aliyên cuda yên bankakarî û fînansekirina Misilmanan e. Bersiva her kesî girîng e. Armanca rêxistinê ew e ku madeya herî berfireh a pêkan bi dest bixin, ji ber vê yekê em hêvî dikin ku nirxandin serkeftî be û bersivên bên dayîn jî dema bertekan tune be. Temamkirina anketê bi qasî 5-10 deqîqeyan digire, ji ber ku hûn bersivê didin çend beşan.. Em teşwîq dikin ku tu beşdarî ceribandinê bibî! Li gel hemû rêz û hurmetan navê ekîba muzakereyê!kysely 

Research Methods for Islamic Banking and Finance Law: Interdisciplinary Research Method

By Sanaa Kadi,

The study presents an original guideline for choosing valid research methods when analyzing Islamic banking regulations and Islamic finance laws. It presents a theoretical model that explains the complexity of the field of Islamic banking and finance, provides legal scholars with a brief analysis of the various issues and challenges that may arise while researching Islamic banking and finance law, and offers different possibilities and solutions to progress and supply high-quality research into Islamic finance. Research on Islamic finance in recent decades has produced extensive literature; however, most of it is descriptive and lacks standard research methods. This creates uncertainty for young scholars and graduate students about the method that should be adopted to address the legal approach to Islamic banking and finance. The outcome of the study leads to the fact that due to the complexity of the subject, multiple research disciplines may interfere with each other in answering different research questions. Accordingly, various solutions have been proposed to help researchers and students with their choices. The study offers an original and unique standard for legal scholars in approaching Islamic banking and finance law.

To see the full text:

Kadi, S. (2022). Research Methods for Islamic Banking and Finance Law. European Journal of Islamic Finance9(2), 1-8.


The pacta sunt servanda principle in Islamic law

By Liam Patrick Nicol, Joel Väisänen, Marc Orti Carceller 

Perhaps shaping the earliest tenet of international law, the pacta sunt servanda principle is the basis of contract law within Islamic business and finance regulations. In this sense agreements must be kept, conferring legal certainty to the contract parties. Therefore, this rule permits the enforceability of legal arrangements, becoming legally binding for the contractors.

The Quran, which is Islam’s first fundamental source of law, includes numerous references to what is known nowadays as the pacta sunt servanda principle. This supports the claim that the notion is not foreign to Islamic law and is compatible with its norms, particularly regarding internal and international ties between Muslims and non-Muslims.

In such a way, Muslim scholars and intellectuals recognize this precept as an essential
religious obligation 1. In accordance with the above, this conceptualization helps to clarify the importance of the responsibility of faithful and straightforward compliance in terms of pacts, contracts and commitments, governing Muslim life.

As a divine law, the Sharia, does not have to be continually updated, thus, in the context of international trade and business, Islamic law has the ability to adapt to new developments. Under the established rules of the principle of permissibility in Islamic jurisprudence, transactions or contracts are not prohibited without a clear and express provision. Thus, it can be generalized that Islamic law accommodates all types of contracts and transactions that do not lead to usury or in other ways violate the Sharia.

According to Islamic law, a contract is binding and enforceable, when there is an offer
(‘ijab); acceptance (qabul); consideration; capacity (ahliyyah); subject matter (mahal al-‘aqd) and absence of duress (ikrah).2 The purpose of the contract must also be acceptable in the context of Islamic religious beliefs. It is forbidden, or haram, for example, to trade in some things, thus, contracts for alcoholic beverages, pork or pornography are invalid and have no legal effect.

Therefore, it is evident from the above discussion that the pacta sunt servanda doctrine is intrinsically divine in the Islamic legal sphere. That is to say, it is a prescribed command of Allah and a holy procedure of the Prophet. Whereby, Allah has instructed Muslims to fulfil their words and as a result of that preserve their faith and dispense justice. If not, punishment will occur in this world and the next. Alternatively put, believers must honour their promises or face consequential action.

So, what is the objective of this principle? It acts as a means to achieve Allah’s contentment by fulfilling pledges made with him and agreements made with others. This principle is much wider than the Western idea of common good. As such, Islam wishes to attain peace and security as a result of following Allah’s commandments. Accordingly, Allah’s joy is the goal, adherence to the doctrine of pacta sunt servanda is a vehicle to acquire that goal and, peace and security is a compensation for the endeavour to achieve the goal.

1 Dawood, H.A., 2012. In Diplomatic Banquet of Treaty: Islamic Sharī ‘ah and International Laws Share the Attires
of Pacta Sunt Servanda. American Journal of Islam and Society, 29(1), pp.30-59

2 Jalil, Dr & Rahman, Muhammad, 2010. Islamic Law of Contract is Getting Momentum. International Journal of
Business and Social Science. 1. 175-192

Ribā Explained

By Isabella Latva, Samuel Geary and Jackielyn Perez

Ribā is a concept which is prohibited (haram) under Sharia law. Commonly called usury in English. Mahmoud A. El-Gamal notes in the book Islamic Finance: Law, Economics, and Finance, that “the three-letter past-tense root of the term ribā is the Arabic verb ‘raba’, meaning to increase”1. This gives rise to the rough definition of ribā as a prohibition on any increase or advantage to the lender obtained as a condition to loans or deposits, effectively prohibiting such things like interest from being charged on loans and deposits. The ordinary version of ribā is called riba an-nasiya. There also remains a second form of ribā according to Islamic Jurists which prohibits the simultaneous exchange of goods of unequal quantities or qualities. The second form of ribā is known riba al-fadl.

The difference between riba al-fadl and riba an-nasiya is that in the former it is not about paying back over time. In riba al-fadl it is about trading different quantities of commodities being similar to each other. For example, it is seen haram to trade wheat for a loaf of bread. It is important to emphasize that riba al-fadl is of less importance nowadays, since barter is not a common way to conduct business in the 21st century.

In Madina, the verses [2:275–9] ordered followers of Islam to abandon all ribā. This ribā included the situation @whereby interest was charged at the maturity of debts from interest-free loans or credit sales and compounded at later maturity date.’2 There are in total 12 verses (in the Quran) that deal with ribā, but the word is only mentioned eight times. The term ribā appears the first time in the Mekkan verse in Surah Ar-Rum: ‘Whatever you lend out in usury to gain value through other people’s wealth will not increase in God’s eyes’ (English translation here).

It is important to bear in mind that the prohibition of ribā is part of the ethical and economic foundation of Islamic finance and is considered a principle of Islamic banking. The underlying reason for such prohibition is to ensure economic efficiency and equity, which seeks to prevent excessive inequity and indebtedness3. The latter explanation is connected to the idea that Islamic banks must operate in compliance with the rules of Islamic Law (Sharia Law), which require to engage only in ethical investing and moral purchasing.

The principle of prohibition of ribā, among others the ban of excessive uncertainty (gharar) and speculation or gambling (maysir), are means to ensure the main goal and objective of the Islamic economy, which is to guarantee “growth with financial stability, equity and distributive justice”4.

1 El-Gamal MA, “Two Major Prohibitions: Riba and Gharar,” Islamic Finance: Law, Economics, and Practice (Cambridge University Press 2006)

2 El-Gamal MA, “Two Major Prohibitions: Riba and Gharar,” Islamic Finance: Law, Economics, and Practice (Cambridge University Press 2006)

3 Wilson, Rodney. “Islamic Finance: Law, Economics and Practice By Mahmoud A. El-Gamal.” Journal of Islamic Studies, vol. 18, no. 3 (Oxford University Press 2007)

4 Azid Toseef, “Anthology of Islamic economics: Review of some basic issues”, Review of Islamic Economics 13, no. 2, p. 165-194 (International Association for Islamic Economics 2010)