Islamic Law in the Age of Blockchain:

Exploring Shari’ah Compliant Cryptocurrencies and Digital Assets

Sheikh Inam Ul Mansoor

 

Abstract: This article examines the role of Islamic law in determining the feasibility of Shari’ah-compliant cryptocurrencies and other digital assets in Islamic financial markets. As more start-ups enter the market with digital currencies and blockchain technology, it is necessary to relate them to Islamic ethics and legal frameworks. This article explores the fundamentals of Islamic finance principles, including the banned aspects of riba (usury), gharar (uncertainty), and maysir (gambling or games of chance), as a way of examining how cryptocurrencies relate to or violate these principles. It also evaluates the potential of blockchain technology to promote transparency, fairness, and ethical practices in financial transactions, aligning with the guidance in the Qur’an on justice and equity in business dealings. The article argues for the development of specific standards that define Shari’ahcompliant financial assets. It analyses numerous cases of cryptocurrencies that sought to comply with these standards, examining the legal and regulatory aspects, coupled with the general potential of blockchain utilisation in the gradual further developments in Islamic finance in the risk-sharing models like mudarabah (profit-loss sharing business) and musharakah (joint enterprise or partnership). The article concludes that the prospects of blockchain technology are vast for Islamic finance, but the use of this technology in coins needs continuous legal and ethical appraisal in relation to its Shari’ah compliance. The article suggests further developments in this regard and specific recommendations for public policy development to set the international legal framework for Shari’ah-compliant digital assets.