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All praise is due to Allah, and may His blessings and peace be upon His Messenger ﷺ, his family, and his Companions. To proceed:

A digital or cryptocurrency may qualify as a tradable asset without necessarily qualifying as currency in Islamic law, as of now. This distinction is important because the rules governing the exchange of ordinary assets differ from those governing currency exchange (ṣarf). This ruling may change if it is accepted as universal legal tender. 

 Digital Currency as an Asset

One contemporary juristic approach recognises qualifying cryptoassets as māl—property possessing recognised value—and classifies them as ʿurūḍ, meaning non-monetary assets or commodities. Under this approach, they may be bought, sold or exchanged for lawful goods, provided the requirements of a valid transaction are fulfilled.

The Sharīʿah Advisory Council of the Securities Commission Malaysia adopted this distinction in its 2020 resolution. Within its regulatory scope, it classified technology-based digital currencies without underlying assets as ʿurūḍ, rather than currency, and consequently did not subject their trading to ṣarf. It permitted trading in qualifying digital assets through registered exchanges. This is a conditional position, not approval of every token or platform. (Digital Assets from Sharīʿah Perspective, pp. 2–4, 2020 resolution.)

Applied to a purchase, this means that an eligible cryptoasset could be transferred in exchange for goods as an asset forming the consideration. Calling it a “payment” does not, by itself, establish that it is legally currency.

Does it have the status of money?

Recognised value and monetary status are separate questions. Something may be valuable and exchangeable without being naqd. Scholars therefore examine its nature, customary use and role in pricing and settling transactions.

In the classical Shāfiʿī discussion, Imām al-Nawawī describes the effective cause of ribā in gold and silver as:

«كونهما جنس الأثمان غالبًا»

That is, their belonging to the category ordinarily serving as monetary prices. This should not be simplified into a requirement that a currency be accepted everywhere in the world.

Al-Nawawī further records that, according to the relied-upon Shāfiʿī position, even circulating fulūs did not acquire the special ribā rules of gold and silver; he also mentions a contrary view. His discussion includes gold and silver objects that are not themselves circulating money, showing that the classical formulation is more specific than a simple test of current popularity. (Al-Majmūʿ Sharḥ al-Muhadhdhab, Book of Sales, chapter on ribā, discussion of its effective cause and fulūs.)

Fulūs—base-metal coins—provide an important comparison. Jurists differed over the legal significance of their customary monetary use.

In Al-Mudawwanah, Ibn al-Qāsim reports that Imām Mālik rejected deferred exchange of fulūs for gold or silver. Mālik extended the reasoning to a hypothetical currency made from leather if people adopted it as stamped money. This demonstrates the relevance of conventional monetary use within his approach. (Saḥnūn, Al-Mudawwanah, Book of Currency Exchange, “Delay in the exchange of fulūs”.)

Al-Kāsānī likewise records a difference within the Ḥanafī school: Muḥammad ibn al-Ḥasan regarded circulating fulūs as having an established monetary character, while Abū Ḥanīfah and Abū Yūsuf allowed their treatment as commodities in certain contractual circumstances. (Badāʾiʿ al-Ṣanāʾiʿ, Book of Partnership, discussion of fulūs as partnership capital.)

What follows for actual transactions?

Under the commodity classification, the special requirements of ṣarf do not apply merely because the asset is called a cryptocurrency. Nevertheless:

• The asset must have a lawful, recognised benefit, and its ownership, quantity and delivery must be sufficiently clear.

• The transaction must avoid fraud, excessive uncertainty and gambling.

• Ordinary sale requirements concerning possession and delivery remain applicable.

• Tokens representing gold, currency or other underlying assets require separate assessment; their backing and attached rights may affect their ruling.

Classifying an asset as non-monetary does not permit interest-bearing loans in it. The rules concerning ribā in loans are broader than the special rules governing the exchange of currencies and other ribā-bearing goods. This is expressed in the juristic maxim:

كل قرض جر منفعة فهو ربا

“Every loan that brings a benefit is ribā.”

Here, the prohibited benefit means an additional benefit stipulated or agreed upon for the lender in return for the loan, rather than every incidental benefit. 

For example, lending someone one unit of a cryptoasset on condition that they repay 1.1 units constitutes a prohibited stipulated increase, even if that cryptoasset is classified as a commodity. By contrast, a borrower’s voluntary repayment of something better, without a prior condition or agreement, is a separate matter and is permissible in principle.

Accordingly, qualifying cryptoassets may be used in lawful exchanges under the commodity approach, but this does not make every arrangement involving them permissible. Their monetary status and the nature of the contract—whether a sale, exchange, loan or investment—must both be examined before a specific ruling can be given.

Allah knows best.