Indonesia-based company Blossom Finance published a working paper that states that blockchain is a boon to the Shariah requirements of transparency and qualifies bitcoin as an acceptable Islamic currency “except where it is banned by a local government.”
While using cryptocurrency is permissible, Blossom Finance recommended to utilize cryptocurrency networks as a payment system instead of an investment asset. It is also advised to be cautious when it comes to ICO as all types of fraud and deceiving are “both illegal and haram” (prohibited by Shariah law).
“It is commonly argued that Bitcoin and other cryptocurrencies are used for money laundering and other illegal purposes. This is an external factor which does not directly affect on Islamic legal criterion of currency. The use of something lawful for an unlawful purpose does not make the thing itself become unlawful […] However, it is necessary for cryptocurrency users to take care of its related risks.”
– Blossom Finance
Islamic banking has a set of both precise and vague rules that apply to profit sharing, loss bearing, leasing, safekeeping, and more. It was not clear whether cryptocurrencies comply with Shariah Laws. Egypt’s top Islamic cleric had even issued a fatawa (ordinance made by Muslim authority) against bitcoin calling cryptocurrency “haram”.