The Impact of Islamic Law on Cryptocurrency Regulation in Egypt

Hesham M. Abdelgawad

 

Abstract: Cryptocurrencies offer the opportunity to develop a more inclusive and efficient financial system. Nevertheless, they also pose notable challenges and risks, particularly stemming from the growing prevalence of cryptocurrency-related fraudulent activities and crimes. This note discusses the prominent role of Islamic law in Egypt on the prohibition of cryptocurrencies, as demonstrated by the issuance of the Bitcoin Fatw? (a religious ruling) by Dar Al-Ifta, which is Egypt's official Islamic authority. The Fatw? categorises Bitcoin trading as haram, meaning it is forbidden in Islam. This religious ruling significantly influenced Egypt's legal position regarding cryptocurrencies, as reflected in the enactment of the Central Bank and Banking Sector Law No. 194 of 2020 and amendments of other key legislation related to monetary offences. This note critically analyses Egypt's past and current regulatory framework for cryptocurrencies. It demonstrates that the current system is practically ineffective and contradicts the objective of both the Fatw? and the law. The note recommends a reassessment of the Fatw? and the existing regulatory framework, advocating for the adoption of a regulation that permits cryptocurrency-related activities while prioritising the strengthening of penalties for cryptocurrency offenses.