Examining the Adoptability of Cryptocurrency in the Islamic Financial System: Perspectives from Sharīʿah Scholars

Abstract

This study explores the adoptability of cryptocurrency within the Islamic
financial system, a topic of substantial debate among scholars and practitioners. Given the
decentralized nature of cryptocurrency, its acceptance within the conventional and Islamic
financial systems presents unique challenges. To ascertain the legitimacy and possible
adoptability of cryptocurrency under Sharīʿah law, this paper employs qualitative research
methods, using in-depth interviews of twenty-four Sharīʿah scholars. These scholars,
selected through purposive and snowball sampling techniques, possess expert knowledge
of both cryptocurrency and the Islamic financial system. The results revealed that the
acceptability of cryptocurrency in Sharīʿah-compliant financial systems is contingent on
its centralization and its function as a store of value, aligning with the objectives (maqasid)
of Sharīʿah. Cryptocurrency's lack of intrinsic value necessitates its backing by a central
authority or asset to mitigate risks and potential fraud. This research offers valuable
insights into the considerations required for cryptocurrencies' adoption in Islamic finance,
contributing to the ongoing debate on their legitimacy under Sharīʿah law.