The world’s top Islamic finance scholars are debating the validity of cryptocurrencies, in an attempt to determine whether such fast emerging financial tools can be deemed sharia compliant, Reuters reported.
The key question for scholars is whether cryptocurrencies fall under the so-called “ribawi” category, which includes commodities like gold and silver that should be exchanged in equal measure and with immediate transfer of possession, otherwise transactions may involve riba or usury, a major prohibition in Islam.
The issue is on the agenda of the annual sharia conference of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) being held in Bahrain this week.
In light of the rapid development of financial technology, scholars must revisit Islamic finance concepts and how they have evolved over time, Ebrahim Bin Khalifa Al Khalifa, Chairman of the AAOIFI Board of Trustees, said in his opening remarks at the conference.
“This specifically relates to riba (usury) in cryptocurrencies, such as Bitcoin (Bitcoin), among others. Today, the floor is open to tackle this recent breakthrough in the monetary sphere from a sharia perspective.”
According to the report, AAOIFI primarily issues accounting and sharia standards for Islamic finance institutions, but has not revealed any plans to issue guidance on cryptocurrencies.
The issue of religious permissibility could help determine whether Islamic financial firms can invest in cryptocurrencies.
By Jade Olafson