Does Shariah Recognize Cryptocurrencies as Valid Currencies?

Abstract

Undoubtedly, the emergence of cryptocurrencies has imposed the challenge of addressing their Shariah issues. These issues include the very permissibility of their issuance in view of the fact that they are not backed by real valuable assets or supervised by financial authorities, which makes their holders vulnerable to possible fraud and manipulative fluctuations in their values. Other issues include trading in them and whether or not they are considered as commodities subject to the injunctions pertaining to Riba as they apply to conventional currencies. In addition, they have potentially negative implications for the market, such as their use in money laundering, drugs trafficking, and other illegal dealings. This paper treats these Shariah aspects of cryptocurrencies.