Islamic finance is guided by principles that prohibit exploitative financial practices, such as excessive risk-taking (gharar), interest-based earnings (riba), and speculation. However, labeling financial instruments as simply 'Islamic' or 'un-Islamic' oversimplifies a nuanced system that prioritizes ethical and sustainable financial solutions.
Islamic finance distinguishes between Jaiz (permissible) and non-Jaiz (impermissible) transactions based on compliance with Shariah principles rather than a rigid halal-haram binary. Islam follows the ethical and sustainable route to finance and prohibits investments involving interest (riba) or heavy speculation (gharar).
Cryptocurrencies, as an alternative investment class, have long been of interest to Islamic finance scholars and experts. Many shun these digital currencies as unethical or speculative, while others consider them the most Islamic mode of finance.
Bitcoin and platforms like Caiz adhere to ethical finance principles, passing rigorous compliance checks. In contrast, highly speculative assets, such as memecoins, introduce excessive uncertainty (gharar), making them incompatible with Islamic financial standards.
With interpretations so far apart, it becomes essential to structure the distinctions and debates around cryptocurrencies and whether they hold the potential to become the next financial standard in Islam. Let’s find out the right way to talk about crypto in Islamic Finance and whether all crypto can be called Jaiz.
Broadly, the concepts of halal (permissible) and haram (forbidden) are used to determine the permissibility of various aspects of life for Muslims. However, these terms don’t always capture the complexity of modern financial systems. When it comes to finance, especially cryptocurrencies, a more adaptable term is “Jaiz” (permissible), offering a clearer framework to assess whether new financial tools align with Islamic values and Shariah principles.
Sharia is the Islamic Canonical Law that reinforces the teachings of the Quran and prohibits certain financial activities, such as interest earnings, which are perceived as usury or Riba. The Sharia law allows Muslims to engage in Jaiz Money.
Jaiz (جائز) money is an Islamic concept, but its connotations go far beyond its religious foundations. Islamic finance finds a solution for some of the significant concerns money faces today, including risk-taking, speculation, unethical interest-based earnings, and more. It focuses on risk-sharing, fairness, transparency, and sustainability in finance and investments.
Away from the greenwashing so prevalent in modern ESG practices, Jaiz money is Sharia-compliant, ethical, and devoid of any ills such as gambling, speculation, etc. It upholds the idea of responsible finance, which is based on Islamic philosophy. Thus, it marks a transition from debt-based money.
Dr. Humayon Dar, the Director General of the Cambridge Institute of Islamic Finance and an Islamic finance product development specialist, says, “a cryptocurrency is permissible as long as it doesn’t breach Islamic prohibitions on interest, contractual uncertainty, and gambling.”
Cryptocurrencies grew as an alternative class of money and are gaining mainstream adoption today. Some of the biggest institutions and banks deal in cryptocurrencies and half a billion of the world population has had interaction with cryptocurrencies in one way or the other.
But are cryptocurrencies Jaiz money? The question has given birth to many learned debates and forums but we can simplify the classification based on the concept of Jaiz money we defined above.
There are broadly two kinds of cryptocurrencies - tokens and coins. While coins such as Bitcoin, Solana, Cardano, USDT, etc., are strictly a medium of exchange, tokens are often issued by crypto startups to secure funding and drive their projects. Their value is derived from the purpose and performance of the startup.. The tokens derive their value from the purpose and performance of the startup.
Early investors get to earn the tokens via an Initial Coin Offering (ICO). An ICO is similar to an Intial Public Offering (IPO) where investors get shares in return. Similar to shares, tokens represent ownership in the startup. While IPOs are heavily regulated, ICOs are not. ICOs have been used to scam people in the past.
However, one can easily distance themselves from fraud and scammy tokens. The legitimate tokens, unless they are in conflict with Islamic principles, are Jaiz. To summarize, a good Sharia-compliant crypto should be:
Lawful and compliant
Should be generally acceptable and homogenous unit of money
Relatively stable in value
Does not involve interest rates/riba
Does not misdirect or give a wrong idea to prospects
Should offer products of real substance and value
Should give money to charity or needy people as donation
Does not encourage or derive funds from gambling
Both Jaiz and un-Jaiz cryptocurrencies exist in the crypto market. Islamic scholars also argue that the purpose of owning, saving, or investing in cryptocurrencies also determines the legitimacy of your investments.
However, Bitcoin is considered the fairest form of Islamic finance as it has a store of value, is relatively stable, and does not involve interest or speculation. Some scholars question Bitcoin for its volatility. But Mufti Abu-Bakar, a scholar of Islamic Jurisprudence, argues that all financial assets are speculative. Even stocks are.
Other cryptocurrencies like Ethereum, Solana, Cardano, Tron, Sui, etc., have solid use cases but the DeFi ecosystems they power involve a certain level of interest and speculation. There are certain new crypto ecosystems on the scene that have made it a point to pull Islamic principles into their infrastructure code.
One such name is Caiz. Caiz is the first Sharia-compliant cryptocurrency ecosystem. It leads the Jaiz narrative with its diverse range of products and services, including Caiz Earn, Caiz Wallet, Caiz API, and more. It has its own chain based on the IFBA (Islamic Finance Byzantine Agreement) model. Caiz chain is a hybrid chain where the centralized layer controls the compliance and funding sources while the decentralized layer ensures transparency, immutability, and security of the Caiz ecosystem.
Chia, Algorand, Cardano, BitGreen, etc. are some other names shifting the sentiment towards responsible and sustainable finance.
How Can Jaiz Finance Bring Crypto Adoption
Nearly 800 million of the global Muslim population remains unbanked, and Caiz, with its Jaiz crypto approach, eliminates the prohibitions of Islamic Finance. The interest-free, speculation-free financial products by Caiz enable millions to access fair, digital, and ethical financial services anytime, anywhere. With the rising demand for Sharia-compliant products, projects like Caiz hold the potential to drive greater adoption. While thousands of cryptos emerge every day, only a few truly stand the test of Sharia principles and ESG compliance, and Caiz is one of them
As consumer awareness of ethical finance and ESG (Environmental, Social, and Governance) standards grows, the demand for Shariah-compliant financial solutions is rising. Yet, few crypto projects genuinely meet both ESG and Islamic finance criteria, making platforms like Caiz essential in setting a new ethical standard.
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