Shaikh Sulaymaan ar-Ruhayli (may Allah preserve him) said:
“We will move on to something which has preoccupied the people in this time. An affair that has preoccupied the people and has trailed them a lot. It is what is called digital monies or electronic currencies. Before I speak about electronic currencies, I say, O brothers, in the technical terms present today, there is digital monies and electronic currencies. It is necessary to distinguish between them. Digital monies are an electronic means which contain the currencies which are familiar. These new electronic means contain currencies which are familiar/known. It contains dinars. It is a new electronic means, like credit cards with their various types. This in reality is not money in its essence, but only a means. As for the money, then it is the currencies that are present now. This, in terms of its origin, is allowed. However, dealing with it remains a position of examination. Is it a Legislated means or not? However, we do not want to discuss that now.
As for digital currencies, then they are electronic, computer monies, established on complicated accounts. It is difficult to uncover them and their domain is electronic networks. That is, it does not have a domain outside of that. Their domain is the electronic networks. Before I speak about its ruling, it is necessary for us to know that money that is considered in the Legislation is of two types. This is very important. For I have seen many of the students of knowledge-who speak about the digital currencies-do not know the Legislated monies. They mix some affairs with others. The monies considered in the Legislation are of two types: one, that it has value in and of itself and the people recognize [using it] in making exchanges. This is called, according to the Jurists, as (النقود السلعية). That is: itself is a commodity, like gold. Gold, O brothers, has value in and of itself, and silver, and copper, and other than that has a value in and of itself. Entering into that is the paper monies when its [value] is returned and backed by gold and silver. In the past, the dinar was backed by gold and silver. The Saudi dinar was backed by silver. So these paper monies are representatives for something that has value, which is gold or silver. This is the (النقود السلعية).
The second type: is the monies that do not have value in themselves and their value is based on the strength of the economy of a country. The warranty/guarantee [for this type of money] is upon the country. Like the paper money today. In your pocket are all papers, dinars. Valued [for example] at ten dinars. Is the value in and of itself? Itself has no value. Is its value backed? Where does it gain its value? From the strength of the economy of Kuwait. It is said about an economy that if it is strong, its currency is strong or firm. If Allah decreed and weakness occurs in the economy, then what will happen to the value of the currency? It will go down. So this does not have any value in and of itself, but its value is based on the strength of the official economy of the country and the warranty/guarantee is upon the country. So this warranty/guarantee is written down. This is called (النقود الإئتمانية). The other one is called (النقود السلعية) because it has value in and of itself, where as this one is (النقود الإئتمانية). They are both monies which are considered in the Legislation. Keep this in your minds, for we will use this in deriving the ruling on this (electronic) currency.
Some of the students of knowledge have allowed digital currencies based on the permissibility of (النقود السلعية). O brothers, according to your mind, are electronic currencies (النقود السلعية) or (النقود الإئتمانية)? We suppose it is (النقود الإئتمانية) because it does not have an existence in the outside world. Electronic, digital currencies are very many, however, the most popular is this bitcoin that is present [nowadays]. It emerged at the end of 2007 and at the beginning of 2008 as an idea. Then it appeared as a reality in 2009 except that it did not gain momentum and prevalence except in the year 2017. It developed a strong momentum in reality. Most of the Legislated bodies held back from offering a verdict on it. Most of the considerable Legislated bodies in the Islamic lands held back, until even now a verdict has not been issued. Some of them are undergoing a research on it now and others are waiting until the matter settles. That is: “we will not issue a verdict because it is an unsettled [issue]’. When its situation settles and becomes clear, a verdict will be issued. Some Legislated bodies have issued a verdict and likewise some researches have done the same. I notify [you], O beloved ones, that some of the verdicts for the permissibility of it are based on what its owners will do in the future, not upon the [present] reality of this currency. However, they rely on the idea that these currencies will become official [currencies]. So they passed the verdict for [its] permissibiilty. They based their verdicts on what will occur not what it is reality [now]. This is not upright Fiqh. Why? This is because it is obligatory that a ruling be based on the reality. As for what might occur [in the future], then it might occur or might not occur. What will occur is the unseen, O brothers. It might occur or might not occur, especially if there are no present indicators that indicate the future. There are no present economic indicators that point to the future [of this currency]. It is not allowed to base a ruling on the future. We rule on the reality. If the condition changes in the future, then we rule on what occurs if we are [still] present (i.e. alive). This is because a ruling revolves around its juristic reason. This verdict [for its permissibilty] encourages people to deal with electronic currencies in the present reality. If you tell the people it is permissible, then they only wait for you to say it is permissible. They will not wait for what will occur in the future. They will deal with it immediately and that is not permissible.
So it is obligatory that the speech on these digital currencies be in accordance to their reality. This is the first notification. The second is that those who pass the verdict for its permissibilty say that these digital currencies are a reality which we cannot resist. The condition of the people will change, like when fax first emerged. When the fax [machine] first emerged, some of the Mashaaikh said it was unlawful (haram). They said it uses jinn. You put the paper in a machine and it appears in another country. [They said] this is magic using a jinn. Then after that the affair settled and it became lawful and the Mashaaikh started using fax and what is beyond that. So they claim that digital currencies are like that. This is a great mistake. There is a difference between resisting the new because it is new or its reality is not known-such that a person does not known its reality and so resists it- and between resisting something because it is unlawful (haram) as an action. As for the first one, then no doubt things will change throughout time and the reality [of matters] will become apparent, like the radio, fax, etc. As for unlawful (haram), which is prohibited because it is unlawful (haram), then it remains unlawful (haram). I will give an example. Drugs in some lands are a reality. Like smoking cannabis (حشيش) in some Muslim lands is a reality with most youth and they smoke it openly. Cigarettes or hookah etc. Instead of eating seven Ajwa dates [in the morning], they smoke a cigarette of cannabis. They say: ‘Get a (صبحية), no problem”. It became a reality. Should we say that now that it has become a reality, we cannot prevent it because it has become a reality? The answer will remain. We will say it is unlawful, unlawful, unlawful. It is a must we prevent them.
We move from here to the Legislated ruling on these currencies. Those who study these currencies have two opinions. The first opinion is that it is permissible to deal with them in exchange and trade. Exchange-of course you know there are ways of paying-so you can buy things with it (with these electronic currencies). Trading is buying and selling, They used as evidences that the origin of mutual dealings is permissibilty. They say this is from mutual dealings and mutual dealings are permissible. Also they use as evidence that some countries have begun to approve these currencies and some countries are studying whether to approve them. So it has gained the strength of the country’s regular economy according to their opinion. Is it clear O brothers? So the first reason [for why they argue it is allowed] is that it is from the mutual dealings which are permissible and the second reason is that it has gained the strength of a country’s regular economy. Some of the countries have approved it, like Germany as well as some European countries, and some countries in South America. Some countries are studying whether to approve them. They also say that the strongest opinion among the Scholars is that whatever the people recognize as an exchange, then it becomes money. If the people recognize animal skins as an exchange, then an animal skin becomes money. And the people today have recognized the exchange of electronic,digital currencies.
The second opinion is the impermissibility of dealing with electronic currencies absolutely. It is not allowed to deal with them due to some affairs. Of course, the ruling for its impermissibility has come from official bodies, the Iftaa (office for verdicts) in Egypt and the Ifta in Turkey. They passed the verdict that it is impermissible. The reason for its impermissibilty returns to some affairs. The first affair: it does not have real value. Rather its value according to economic criteria is zero. Its value depends on complicated digital accounts. Its value is not relied upon. The second affair: there does not exist a country which issues it or gives a warranty/guarantee for it. There is no country in the world that issues it nor a country in the world that gives warranty/guarantee for it at all. So it does not obtain any characteristic from the characteristics of money. How? It does not have value in and of itself, so it is not (النقود السلعية). Nor does it earn the regular strength of the economy. So it is not from the (النقود الإئتمانية). So the monies considered in the Legislation are restricted to this. The third affair: its value is market value which is based on market speculation and it is very risky/violate. That is: all the economists consider it high risk. According to the economic measures, there is low risk, medium risk, and high risk. They are different. Between 1%-20% is considered low risk, between 20%-50% is considered medium risk, and from 50%-70% is considered high risk. Most of the economists consider the risk of paper currency above 70% risk. It is very high risk and it is possible to be lost in any moment. What adds to this reality is the severe fluctuation of the value of this currency. The value of this currency rose until it reached $20 000. Then it dropped 60% of its value and then dropped again until today its went under $6000. The fourth affair: its source is unknown. Who founded it? In the past until now it is unknown. [The currency] is produced by some actions which have been translated [into Arabic] but not with a detail translation. Is it (تعدين) mining or [Shaikh uses another word which is not clear to the translator]. It is not a detailed translation of the English word, however that is what is closest. The origin for it is unknown. The fifth affair: It is impossible to observe it and be accurate in using it. Why? Because it is encrypted with a detail encryption. Who is the one who is capable of observing it? Following that, it is a source for evil actions like terrorism. Terrorists today have found a platform for their financing because the financing activities of the terrorists have become tightened. So they find digital currencies spacious platforms. This is because it is not possible to observe it. Also [it is used for] laundering evil money. It has become a platform for evil actions. The sixth affair: that the experts in the Fiqh of mutual dealings and economics have realized that this currency is harmful for the economics of a country and weakens the economics of a country. The economy will be in the hand of unknowns who will dominate the economics and manipulate it. It is not a country. And I would not be surprised myself, even though I do not have any tangible [evidence], that the Jews are behind this. This is because often these mysterious economic issues are established by the Jews. This is because the idea of the Jews in dominating over the world is through the philosophy of money. Likewise the Freemasons have established their dominance over countries through their dominance over the economics. There is no doubt these digital currencies will weaken the present economics, especially if they are given a platform. The economics will become like a feather in the wind and the economics will be dominated by unknowns who will manipulate with it.
All of this leads a jurist to be certain that it has a lot of risk and dangerous unknowns. It is in reality in the highest form of risk. The jurist who is an economist and the businessman who knows the market knows that it is in the highest form of risk. The Prophet (ﷺ) prohibited the (الْغَرَرِ) [uncertain] transactions as in Saheeh Muslim. There is not doubt that these currencies are in the highest level of risk. The seventh affair: it has the greatest risk. A person pays a portion of his wealth hoping to receive a lot of money without any real work. In it is a form of gambling. You purchase currencies which do not have a reality, with a portion of your wealth, and then you wait until a profit comes to you. You did not do anything nor does it have a reality. So in it is a form of gambling. The eighth affair: it has a high level of risk without a warranty/guarantee for it. No country gives a warranty/guarantee for it despite its severe risk. So putting wealth into these currencies is wasting wealth and Allah has prohibited us from wasting wealth as the Prophet (ﷺ) informed .
So like that I say: what is apparent to me, and Allah knows best, is that the correct opinion is the second one and that it is unlawful (haram). As for what those who permit it say, that the origin of mutual dealings is permissibiilty, then we say yes. The origin of mutual dealings is permissibility and Allah has expanded the mutual dealings for the Ummah of Muhammad (ﷺ) and He did not restrict them in it. However, it is stipulated that there not be in the mutual dealings what is prohibited in the Legislation. If there is exists in it what is prevented in the Legislation, then it becomes unlawful (haram). If we leave the masjid [for example], and I ask Allah not to allow this to ever occur, and we find a man at the door of the masjid selling bottles of alcohol, “One for ten, one for ten”. We would say: “my brother what are you doing?” He would say: “selling”. We would say: “Its unlawful (haram)”, and he would say: “The origin in mutual dealings is permissibility. Allah says: “whereas Allah has permitted trading [2:275]“. Would a sane person say it is valid? No. There exists a Legislated preventative. And we have clarified the preventatives in the Legislation against uncertain trade, unknown trade, and wasting wealth in relation to these currencies. What they mention in terms of some countries approving this currency, like Germany, and some countries in Europe, and some South American countries, then we say: there is no country that issues this currency or bases this currency in economics or gives warranty/guarantee for these currencies. What occurred is that some of these countries have approved these currencies for accounting in order for the country to collect taxes from it. When these countries saw that the money is very high, they said: ‘if we leave it like this, the country will lose its right to taxes [from it]. However if we consider it from the accounting aspect, we will have places to obtain taxes from these transactions’. So they do not approve them from the aspect of economics in terms of issuing them nor by way of giving warranty/guarantee for them, however it is to obtain [the country’s] right. If the places [which deal with this currency] have any issues, then they do not have any warranty. However, it is obligatory to present a tax return connected to [these currencies]. This is what occurred. It is obligatory that we differentiate between approving a currency for accounting benefits and between approving a currency in terms of issuing it and giving a warranty/guarantee for it. The lesson is to consider whether a country approves these currencies by issuing them and making them legal tender or giving warranty/guarantee for them. And that is not present.
As for their statement that the people recognize it as an exchange and some of the Scholars have said that whenever something becomes recognized as an exchange, it becomes money, then we say this attachment is not valid. Why? Because the speech of some of the Scholars is only in relation to (النقود السلعية) which has value in and of itself. If the people recognize it, then it becomes a currency and it does not need to be approved by the government because it gets is value from itself. Gold has value. If the people recognize gold as an exchange, then its becomes a commodity and money. Even animal skins. If it becomes an exchange, then it has a value in and of itself. However, O brothers, using our intellect, can someone buy one hundred grams of gold with a piece of animal skin? It is not possible. According to intellect, something is assessed according to its value. An animal skin is worth how much? A fils (a subdivision of currency in the Arab world not worth much).Okay then, it is worth a fils. The animal skin can be used to buy what is worth a fils. So this is the speech of the Scholars about (النقود السلعية). And these currencies are not from (النقود السلعية). Rather they do not have any value in and of themselves. So it is not correct to attach that [principle] to it.
In conclusion, in terms of speech on this currency, I remind every believer to be hesitant in dealing with it. We clarified it and all we can do is clarify. We clarified those who say it is allowed, the reason for their statement, as well as the response to their statement. Also those who say it is impermissible and the reasons for their statement in accordance to the principles of the Legislation. I am tranquil in my heart that the principles of the Legislation prevent dealing with these currencies. With that I say to the believer who is hesitant regarding it, to remember the statement of the Prophet (ﷺ):
دَعْ مَا يَرِيبُكَ إِلَى مَا لاَ يَرِيبُكَ
Leave that which makes you doubt for that which does not make you doubt [Reported by Tirmidhi and others. Graded Saheeh by Imam al-Albani in Saheeh at-Tirmidhi (no. 2518)]
And the statement of the Prophet (ﷺ):
إنَّ الْحَلَالَ بَيِّنٌ، وَإِنَّ الْحَرَامَ بَيِّنٌ، وَبَيْنَهُمَا أُمُورٌ مُشْتَبِهَاتٌ لَا يَعْلَمُهُنَّ كَثِيرٌ مِنْ النَّاسِ، فَمَنْ اتَّقَى الشُّبُهَاتِ فَقْد اسْتَبْرَأَ لِدِينِهِ وَعِرْضِهِ، وَمَنْ وَقَعَ فِي الشُّبُهَاتِ وَقَعَ فِي الْحَرَامِ، كَالرَّاعِي يَرْعَى حَوْلَ الْحِمَى يُوشِكُ أَنْ يَرْتَعَ فِيهِ
That which is lawful is clear and that which is unlawful is clear, and between the two of them are doubtful matters about which many people do not know. Thus he who avoids doubtful matters clears himself in regard to his religion and his honor, but he who falls into doubtful matters [eventually] falls into that which is unlawful. Like the shepherd who pastures around a sanctuary, he will soon pasture in it [Bukhari and Muslim]
Just as I remind you of the statement of Ibn Umar (may Allah be pleased with him):
إِنِّي لَأُحِبُّ أَنْ أَدَعَ بَيْنِي وَبَيْنَ الْحَرَامِ سُتْرَةً مِنَ الْحَلَالِ لَا أَخْرِقُهَا
Verily I love to place between me and the unlawful (haram) a barrier from the lawful (halal)l. I do not puncture it [Mentioned by Hafidh Ibn Rajab in Jami’ Uloom wal-Hikam pg. 98]
Not from unlawful (haram). The barrier is from the lawful (halal) and the lawful (halal) is much, all praise is due to Allah. However, place a barrier and do not puncture it because the one who punctures the barrier will soon fall into the unlawful (haram). The least that can be said about this issue i “Leave that which makes you doubt for that which does not make you doubt “as the Prophet (ﷺ) commanded. Despite the fact that the affair is not doubtful to us. It is clearly unlawful (haram). however, I say: if you are doubtful then do not let Shaytan fool you. “Leave that which makes you doubt for that which does not make you doubt”.
I ask Allah, the Exalted to facilitate the Ummah of Muhammad (ﷺ) towards the lawful (halal), and that He suffices them in the lawful (halal) as opposed to the unlawful (haram), and protect us from the newly invented evils, and that He aids us all to hold fast to what Allah loves and is pleased with. Perhaps this is sufficient. And even though the contemporary financial transactions are many forms, I mentioned in the beginning that I have a book which will be published soon in shaa Allah. In it I have collected many forms of the contemporary financial transactions and the speech of the Scholars regarding them. I have studied them and I have mentioned what is apparent to me to be the strongest opinions. I ask Allah to make the book good, and to make me a servant for the Ummah of Muhammad, a companion for them. I ask Allah to not issue from me or against me anything except that which is good for the Ummah of Muhammad (ﷺ).
Perhaps we will answer some questions [now]. May peace and blessings be upon our Prophet Muhammad (ﷺ)”
[Taken from the tape: Contemporary financial transactions- The Fourth Sitting. Delivered on Feb 16, 2018. From the 25:00 min mark until 62:10 min mark. That part of the lecture can be listen to here]
The Full Lecture Can be Listened to Here:
Faisal bin Abdul Qaadir bin Hassan