Comment on Taqi Usmani’s Fatwa on Cryptocurrency

Dr. Omer Awass

Capitalism is responsible for bringing novel types of economic and financial products that have never existed in economic history. One such product that has risen over the last decade and a half is cryptocurrency, since Bitcoin first appeared in 2009. Cryptocurrency is a form of ‘digital money’ that was envisioned as an alternative to conventional currency for commercial exchanges and as a store of value. What is Islamic ethics and law’s position on this form of ‘property ‘? In July 2026, Taqi Usmani, one of the leading Muslim jurists in contemporary Islamic finance, issued a fatwa stating that cryptocurrency did not constitute genuine property (Arabic: mal) and that it was an illegitimate means of settling commercial transactions in Islam.

The text of the fatwa is available online; however, the language of the fatwa is Urdu, and parts of the proof text used in its legal reasoning are in Arabic (See the following link for the text of the fatwa: https://theislamicinformation.com/news/mufti-taqi-usmani-declares-cryptocurrency-trading-haram/, accessed September 8, 2026). I can access the fatwa’s argument in the Arabic portions, but the Urdu portions are inaccessible to me. However, a summary of some of its main arguments is available online, which I will use to assist me in presenting this fatwa.

Like most fatwas, this fatwa begins with a question from a religious layman seeking ethical guidance in their transactional affairs and religious practice. In this case, the layman wanted to know the legality of a commercial transaction in which he bought books and paid tuition for educational courses using cryptocurrency. However, like many fatwas, this fatwa goes beyond establishing the legitimacy of this particular transaction to address the broader question of the legitimacy of cryptocurrency itself. This more universal concern is what this essay will address, rather than the particulars of the laymen’s requests.

We are told that Usmani had previously disputed the legitimacy of cryptocurrency based on one of the fundamental Islamic economic principles: the prohibition against excessive speculation/uncertainty (gharar) [I will return to this issue later in this essay]. Nevertheless, the basis of the argument in this fatwa is that cryptocurrency does not constitute real property (mal); it neither serves as a proper medium of commercial exchange nor does it have any real value.

Usmani states that cryptocurrency represents notional numbers in an account (https://theislamicinformation.com/news/mufti-taqi-usmani-declares-cryptocurrency-trading-haram/ accessed September 8, 2026), meaning it is a figurative estimate of an anticipated value rather than representing a real value. In this way, it cannot be considered real property that can be exchanged or be a real store of value. Critics have argued that Usmani’s position on cryptocurrency is contradictory, given that he assigns value to fiat currencies such as the US dollar. According to these critics, these types of properties have no inherent value, yet people legitimately transact with them as if they have real value (https://coinstudy.co/blog/mufti-taqi-s-fatwa-rebutted accessed September 9, 2026). However, this criticism overlooks some historical contingencies that led fiat currencies, especially the US dollar, to acquire monetary value. These historical economic dynamics are too complicated to get into here and have to do with the European colonial impositions across the globe and particularly dollar hegemony that forced the rest of the globe to operate by the financial rules established by postcolonial financial institutions like the Bretton Woods Agreement of 1944 (For the circumstances leading to the contemporary preeminence of American fiat currency, see the discussion of “dollar hegemony” in Chapter 6 in Omer Awass’ Imposing Modernity in the Global South (2027). However, fiat currencies became the imposed norm despite deviating from the Islamic definition of true property and, as such, became a newly established global commercial custom. This imposition gave fiat currency legitimacy by necessity, based on the Islamic legal principle that exigencies make unlawful things lawful. In my estimation, cryptocurrencies do not meet the exigency standard that fiat currencies met in contemporary circumstances, except in extraordinary cases where countries of the Global South use cryptocurrencies to evade illegal Western financial sanctions that are crushing their economies. Again, it becomes a question of necessity.

Moreover, his critics and his supporters (https://coinstudy.co/blog/mufti-taqi-s-fatwa-rebutted and https://muslimviews.co.za/why-mufti-taqi-usmani-says-cryptocurrency-is-not-shariah-compliant-today/?mc_cid=f6728f48b6 accessed Sept 10, 2026) impute to Usmani that one source of his reluctance to accept cryptocurrency as property is its lack of tangibility. However, the critics claim that abstract rights, which are not tangible, such as intellectual property rights and software licenses, were accepted as having value in Usmani’s estimation. They argue that his position against cryptocurrency is inconsistent with other accepted intangible properties. However, this criticism fails to recognize that abstract rights, such as intellectual property rights, constitute property because of the labor that went into giving them value. Describing the economic role of labor, the 14th-century Muslim social theorist and judge (qadi), Ibn Khaldun, asserts that labor is the source of value creation in any product or service. Expounding on his labor theory of value, he states:

….[T]he capital a person earns and acquires, if resulting from a craft, is the value realized from his labor. This is the meaning of acquired (capital). There is nothing here (originally) except the labor …..If the profit results from something other than a craft, the value of the resulting profit and acquired (capital) must also include the value of the labor which it was obtained. Without labor it would not have been obtained (Ibn Khaldun 1958: V. 2, 313)

Thus, in Islamic legal understanding, value is created by labor, and contemporary Muslim jurists recognized that abstract rights like copyright represented a value generated by the labor of the author/publisher, for instance, and hence constituted real property even though previous legal custom did not recognize such properties as having value (see Omer Awass’ discussion on abstract rights in Fatwa and the Making and Renewal of Islamic Law). On the other hand, we may ask: what labor went into cryptocurrency to confer a value comparable to that of abstract rights? This question is very ambiguous about cryptocurrency, given the very origins of the entity itself remain somewhat mysterious as to how they are constituted and whether that constitution represents a genuine value.

As for the legal reasoning Usmani employs in his fatwa, he relies on established legal injunctions regarding what constitutes a proper commercial transaction and what is a proper subject for exchange in a commercial transaction. Here he cites classical (Arabic) texts in Hanafi law (commentaries on the al-Majallah and on classical legal texts like al-Durr, for example) on the topic of sales that define a transaction as fundamentally unsound or null (batil) and as deficient (fasid). The purpose of citing such legal definitions is to show transactions with cryptocurrency are not merely deficient but lie in the category of the fundamentally unsound transactions. While deficient transactions are rectifiable by correcting the conditions of the transaction that were violated, unsound transactions are not. They are null and void because the very nature of the transaction is illicit (e.g., a murder contract is fundamentally void). Cryptocurrency falls in this latter category.

Here, Usmani is employing historical jurisprudence to couch his legal reasoning in legal precedent. Given this manner of legal reasoning, Usmani’s fatwa can be characterized as follows: Firstly, it is a kind of historical jurisprudence in that it takes established legal norms and rulings as a reference point for its own rulings; secondly, it is a sort of hybrid jurisprudence in that it is not merely an extension of those historically established legal norms and rulings, but it is a product of a new legal rationale that is addressing novel socio-historical conditions.

But at the same time, he is appealing to established ethical/legal norms that are guiding his judgment about the legitimacy of cryptocurrency. We are told that, in other pronouncements, but not necessarily in this fatwa, Usmani has criticized the speculative nature of cryptocurrency (https://coinstudy.co/blog/mufti-taqi-s-fatwa-rebutted accessed September 10, 2026) and that excessive speculation also violates the basic ethical rules of Islamic commercial transactions. Speculation and/or ambiguity in Islamic law is known as gharar and “refers to ‘excessive’ uncertainty in relation to price, quantity, or quality of goods in an exchange contract.” (ISRA 2016, 62). Several types of infractions may illustrate Gharar: the non-existence or lack of possession of the subject matter under contract, or lack of information about the subject that is being contracted, or over-complexity in a contract such as making one transaction dependent upon another and in the process creating uncertainty over whether the terms of the transaction would be fulfilled (ISRA 2016, 185-186). Islamic business ethics eschews these practices as unethical because they often lead to disagreement between the contracting parties or, worse yet, exploitation by one or more parties over another in the transaction.

Given this principle, cryptocurrency seems to be the epitome of gharar since “(c)ryptocurrency markets are characterised by extreme price volatility, often experiencing dramatic gains or losses within hours. Such movements encourage speculative trading rather than investment based on genuine economic value” (https://muslimviews.co.za/why-mufti-taqi-usmani-says-cryptocurrency-is-not-shariah-compliant-today/?mc_cid=f6728f48b6 accessed September 10, 2026). Beyond such volatility, though, cryptocurrencies’ very origins are steeped in ambiguity, as their initial formation did not have an authoritative source or be backed by some tangible asset that would give them legitimacy and/or value; thus, bringing about a situation where there is a “lack of information about the subject that is being contracted.”

In conclusion, this fatwa speaks to issues beyond cryptocurrency, as it injects ethical considerations into the economy and commerce, something neoliberal capitalism eschews, since it propounds that market forces should be the sole determinant of economic activity. Fatwas such as these fly in the face of that logic.