Bitcoin trading proclaimed unlawful in Egypt
As more and more people become aware of, and trade in, Bitcoin, it is inevitable that questions relating to its usability will pop up. Even though the currency is financial in its intended use as a medium of exchange, it can be subjected to religious and cultural investigation.
Sharia law is a core component of the Islam faith, and is based on religious principles derived from the Quran and the Hadith. Based on these beliefs, the Grand Mufti Shawki Allam, who is Egypt’s highest official of religious law, has deemed Bitcoin trading “unlawful”.
Allam advised that the currency isn’t an “acceptable interface of exchange”. He added that Bitcoin could aid in money laundering schemes, and also touched on the currency’s decentralized nature. Because it is not controlled by a single entity like the government, it could disrupt the country’s economic structure and system.
In addition, he stated that the
“currency’s risk as well as its high profit potential undermines Egypt's ability to maintain and stabilize its own currency.”
Because of this, Allam irrevocably stated that:
“Bitcoin is forbidden in Sharia as it causes harm to individuals, groups and institutions.”
This critique doesn’t end there. One of Allam’s advisors said that the currency is “used directly to fund terrorists.”
Even though these comments come from religious officials, Egypt’s government is not a fan of Bitcoin either. The country’s Financial Regulatory Authority (FRA) has previously said that investing in digital currencies is a “form of deception that falls under legal liability.”
Matthew Martin, who is the CEO and founder of Blossom Finance, discussed this topic during an interview with Cointelegraph last year. He had this to say:
“As a payment network, Bitcoin is halal. In fact, Bitcoin goes beyond what more conventional closed banking networks offer. Unlike conventional bank networks which use private ledgers where there's no guarantee that the originator actually owns the underlying assets, Bitcoin guarantees with mathematical certainty that the originator of the transfer owns the underlying assets. Conventional banks operate using the principle of fractional reserve, which is prohibited in Islam.”
However, even though Martin believes that the virtual currency could be seen as halal, the chances of it being considered as a medium of exchange in Sharia law are minimal:
“Historically though, Islam has only recognized commodities of intrinsic value as money including things like gold (Dinar), silver (Dirham), rice, dates, wheat, barley and salt. In a strict interpretation of what qualifies as money, Bitcoin probably misses the mark.”
Egypt is not the first to declare Bitcoin a non-currency. Countries like India and Belgium have also stated that it is a not a legalized medium of exchange.
Author : Jack Dean
Jack has worked in the cryptocurrency industry for 5 years now as a reporter. His experience is predominately in banking, while he also has a keen interest in the forex world. His daily output is read by thousands of readers globally.
