The increase in cryptocurrency trading and exchange has raised concerns about both its legal standing in the United Arab Emirates and its conformity with Shariah regulations. Bitcoins are currently “neither halal nor haram” and are “not recommended” according to the nation’s Shariah position. At a recent conference in Abu Dhabi, proponents of cryptocurrencies referred to Bitcoin as the “most Islamic form of money ever invented,” according to Khaleej Times.
Present-day Shariah position
According to a (hotline) scholar from the UAE Fatwa Council, “our current position is ‘tawaquf’; we can’t say it is halal or haram, but we say it is better not to engage in it.” Since there are now many approaches to analyze cryptocurrency, it is a complex topic. The speculative aspect of its current use raises issues because “people are just jumping on it, perceiving it as an investment, because its prices fluctuate and at quite large amounts overnight. Although some people have significantly profited from it, We do not yet suggest it because other premises are involved. Although the Fatwa council does not yet recognize it as an official currency, this could change.
Bitcoin supporters
Proponents of cryptocurrencies contend that the Bitcoin revolution is “missing out” on the Muslim world. According to Arish Ehsan, a financial analyst, Shariah advisor, and expert in anti-money laundering, governments worldwide are becoming more interested in Bitcoin. That leads me to the next most widely used defence of Bitcoin: that, unlike fiat money, it is uncontrollable by any authority .If it persists, all governments will eventually have some degree of influence over it, he continued.
The negative fallout of a flawed banking process has nothing to do with any specific currency or perceived currency,” he said in response to remarks that Bitcoin is more halal than fiat money, which is only created when a new loan is issued and is therefore infused with riba — Islamically forbidden money exchange. In addition to affecting any convertible currencies, it would have an impact on the whole economy.
While some people have earned significant profits from cryptocurrency trading, others have lost money.
Status in law
Attorney Abdulrahman Al Nabhan described the UAE’s cryptocurrency laws as “complex.” The Central Bank has not yet released formal legislation to regulate or forbid commercial cryptocurrency ventures, even if the UAE allows using and mining cryptocurrencies for private use. However, businesses still need permission from the appropriate authorities to engage in any economic operations, thus the lack of regulation does not mean it is completely acceptable.
The expert claims that only the Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC) now have licenses for crypto-related activities. Contractual agreements and transactions must occur within these specified zones to be deemed legally valid. The number of court cases in which investors file lawsuits after suffering financial losses is rising. The investment agency is held accountable and the contract is deemed null and void once it is proven that the agreement was signed outside of the permitted areas. “The court usually orders the return of the invested capital in such cases,” Al Nabhan stated.
