Qardus Guides

Choosing the right halal investment is not straightforward. 

You can earn around 4-5% in an Islamic bank and know exactly what you’ll get at the end of the term. You can also look at SME financing and see much higher projected returns, but with less flexibility and a different kind of risk. Then there are Sukuk funds, which offer regular income and the ability to enter and exit more easily, although the value can move over time. 

The options themselves are not the issue. The difficulty comes from understanding what you are giving up in each case. A higher return often means locking your money in for longer. Easier access usually comes with lower or less predictable returns. Bank products feel familiar, while private investments require a bit more comfort with how the structure works.

This guide breaks down the most common halal investment options in the UK side by side, so you can see these trade-offs clearly and decide what best fits your situation.

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How to Evaluate these Options Based on Your Priorities

The table gives you the numbers, but the decision usually comes down to three things.

Return expectations.
Some options offer fixed returns, like Islamic bank deposits, where you know what you’ll earn at the end of the term. Others, like Qardus, work with targeted returns linked to SME financing, which can be higher but depend on how the underlying deals perform. Funds, such as Sukuk or diversified portfolios, are market-linked, so returns can move over time.

Liquidity.
This is about how quickly you can access your money. Platforms like Wahed Invest allow relatively easy withdrawals, while funds usually take a few days to process. Bank deposits and private investments generally require you to stay invested until maturity.

Risk structure.
Islamic bank products are designed around capital preservation. Sukuk funds are backed by underlying assets and spread risk across multiple holdings. Qardus involves direct exposure to businesses, so returns are tied to their performance.

Breakdown By Provider

1. Al Rayan Bank

Al Rayan Bank is one of the most established Islamic banks in the UK and is often the first place people look when they want a halal savings option. Its main offerings include fixed term deposits and Wakala products, both of which provide pre-agreed expected profit rates over a set period.

The appeal here is clarity. You know the expected return upfront, and for eligible deposits, FSCS protection provides an additional layer of reassurance. The trade-off is that your money is locked in for the duration, and the returns tend to be on the lower side compared to other options in the market.

This works well if your priority is stability and predictability rather than maximising returns.
Best for investors prioritising capital preservation over growth.

2. Gatehouse Bank

Gatehouse Bank offers a similar experience to Al Rayan, with a focus on fixed-term savings products that follow Islamic principles. The structure is familiar, with expected profit rates agreed in advance and funds committed for a defined period.

Where it differs slightly is in accessibility. The minimum investment is generally lower, which makes it easier for more investors to get started. Returns are broadly in the same range, and the same limitations apply when it comes to accessing your money early.

If you are looking for a straightforward and low-risk way to earn a modest return without navigating more complex investment structures, this fits naturally into that category.
Another low-risk, low-return option with predictable outcomes.

3. Wahed Invest

Wahed Invest provides a more flexible entry point into halal investing, especially for individuals who want to start with smaller amounts or prefer not to lock their money away.

Its ISA and GIA portfolios allow you to invest from a low minimum, with exposure to a mix of Shariah-compliant equities and Sukuk. You can withdraw your funds when needed, although it may take a few days to process. Returns are not fixed and depend on how the underlying assets perform.

Wahed also offers real estate investments, which come with a higher minimum and a longer holding period. These are typically less liquid but provide exposure to tangible assets.

Overall, this approach works well if you value flexibility and want to build exposure gradually without committing large sums upfront.
A flexible entry point with exposure to market-based returns. 

4. Franklin Templeton - Global Sukuk Fund

The Franklin Global Sukuk Fund is built around Sukuk, which are often described as the Islamic equivalent of bonds. These instruments are structured to generate income while remaining compliant with Shariah principles.

This type of fund spreads your investment across multiple issuers and regions, which helps reduce concentration risk. It also provides regular income through distributions. At the same time, the value of your investment can fluctuate, and because many Sukuk are denominated in US dollars, currency movements can affect returns for UK investors.

This option tends to appeal to those who want a balance between income and diversification without fully locking their money into a fixed-term structure.
A middle ground between stability and growth, with some exposure to market movement.

5. Qardus

Qardus offers a different model compared to the other options listed here. Instead of deposits or funds, it focuses on financing small and medium-sized UK businesses through Shariah-compliant structures.

Investors participate in fixed-return opportunities linked to these businesses. This creates a more direct connection between your investment and real economic activity, rather than relying on bank balance sheets or public markets.

The potential upside is higher returns compared to traditional savings products. The trade-off is that your money is tied up for the duration of the financing, and there is no FSCS protection. Access is also limited to investors who meet specific eligibility criteria.

This approach requires a higher level of comfort with how the underlying businesses perform and a willingness to commit capital for a defined period.
Qardus is designed for investors who are comfortable giving up liquidity in exchange for stronger income potential and direct exposure to UK businesses.

Choosing Based on Your Priorities

The choice becomes much simpler once you step back from the details. It comes down to how you want your money to behave. 

If your main concern is keeping your money safe and knowing exactly what you’ll earn, then products from Al Rayan Bank or Gatehouse Bank are the natural fit. You accept lower returns in exchange for clarity and stability.

If you want to start small and keep the option to withdraw when needed, portfolios from Wahed Invest make more sense. You get flexibility and market exposure without committing large amounts upfront.

If you are looking for regular income but are comfortable with some movement in value, Sukuk funds from firms like Franklin Templeton offer a balanced approach.

If your focus is on higher returns and you’re willing to lock your money in for a set period, Qardus becomes relevant. That trade-off is very clear: less flexibility, but stronger income potential linked to real businesses.

Decision-making is a byproduct of clear goals. Once you lock in the desired outcome, the "right" option essentially selects itself. 

What to Check Before Investing

Before choosing any option, it helps to take a moment and look at a few practical factors that can shape your experience.

Start with eligibility. Some opportunities, particularly with Qardus, are only available to investors who meet specific criteria, so it’s worth confirming where you stand before going deeper.

Then think about your comfort with risk. Fixed-term bank products aim to preserve capital, while funds and business financing can move in value or depend on performance. Being clear on what level of uncertainty you’re comfortable with makes the decision easier.

Liquidity is just as important. If you might need access to your money in the near future, options with easier withdrawals give you flexibility, while others require you to stay invested until the term ends. 

Finally, if you’re considering Sukuk funds, keep currency exposure in mind. Returns may be influenced by movements between the pound and other currencies, particularly the US dollar.

Data Sources and Verification

Figures were last verified on 29 April 2026 using information from provider websites and publicly available factsheets. Minimum investments, expected returns, and product terms can change over time, so it’s worth checking the latest details directly with each provider before making a decision.

Explore Halal Investment Opportunities with Qardus

If you’ve gone through the comparison and feel that traditional bank returns don’t quite match what you’re looking for, it may be worth taking a closer look at how Qardus works. The model is different, and that difference is what creates the potential for stronger income, along with a different set of considerations.

You can take your time to understand the structure, how returns are generated, and what committing capital actually involves.

If it feels aligned with your goals, you can learn more about the process or explore current opportunities directly.

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Many individuals, especially those who run businesses or have irregular income, tend to keep a portion of their cash sitting in their accounts. It’s there for comfort, flexibility, or simply to deal with anything unexpected that might come up in the next few months. That instinct is understandable, particularly when income doesn’t arrive on a fixed schedule.

But this cash isn’t really standing still. Its purchasing power changes over time, and the longer it remains unused, the further it drifts from what it could have supported or preserved. At the same time, for many Muslim investors, moving this money into conventional options doesn’t feel straightforward, because compliance matters just as much as maintaining control.

True cash management now requires a balance between ethical integrity and the operational freedom to move capital whenever necessary.

Why Businesses Accumulate Idle Cash

Many people hold onto cash because it gives them room to move without stress. Expenses don’t always follow a neat pattern, and income can be uneven, so keeping a buffer feels like the sensible thing to do. For Muslim investors, there is an added layer to consider, since not every place to park cash offers the level of clarity they’re comfortable with.

This usually isn’t about poor money management. It’s closer to being aware of uncertainty, but not having a clear and reliable way to put surplus cash to work while still keeping control and staying within acceptable boundaries.

The Hidden Cost of Doing Nothing

Holding cash can feel like the safest option, especially when the priority is stability. The issue is that “safe” often just means unchanged on the surface, while the real value underneath is slowly lowering. Inflation reduces what that cash can actually do over time, even if the number in the account stays the same.

There’s also the opportunity that never gets a chance to materialise. Cash that sits idle doesn’t participate in any form of growth, however modest or structured it might be. It ends up becoming an underperforming part of your overall wealth, simply because it isn’t being given a role beyond sitting still.

The Constraint: Compliance + Liquidity

This is where the priorities begin to pull in different directions. You want your cash to be accessible when you need it, and you want it to hold its value without taking on unnecessary risk. At the same time, staying within Muslim financial principles matters just as much as maintaining that flexibility.

Many of the usual options available for parking cash are built around liquidity and stability, but they often rely on structures that don’t align with Shariah requirements. That leaves a smaller set of choices where both access and compliance are considered together. The goal is to find a strategic home for your cash that satisfies your operational requirements and your ethical standards simultaneously.

Where Can SME Cash Actually Go? (Practical Options)

Once you accept that idle cash needs a role, the next step is understanding where it can actually go without creating new problems.

Islamic Business Savings / Deposit Accounts

For short-term needs, Islamic savings or deposit accounts are often the starting point. They tend to be low risk and easy to access, with returns structured through profit-sharing rather than interest. They don’t aim to do much beyond preserving value and offering a modest return, which makes them suitable for cash that may be needed at short notice.

Sukuk Funds (Islamic Fixed Income)

Sukuk funds come into the picture for slightly longer horizons. These are typically backed by real assets and offer a more structured return profile than a basic account. Liquidity is still there, but not in the same immediate sense, so they work better for funds that are not expected to move quickly.

Shariah-Compliant Money Market / Low-Risk Funds

There are also Shariah-compliant money market or low-risk funds, which spread exposure across a range of instruments designed to preserve capital while improving on what idle cash would earn.

Staggered Allocation (A Practical Approach)

A practical way to approach this is not to choose one option, but to layer them. Some cash stays fully liquid for near-term needs, some sits as a buffer, and some is positioned more deliberately. This kind of allocation tends to reflect how people actually use their money, rather than forcing everything into a single bucket.

A Practical Way to Think About SME Cash

A simple way to approach SME cash reserves is to think in layers rather than treating all cash the same. 

The first layer is immediate liquidity, which covers everyday needs, relying on instruments that can be accessed without delay, such as Islamic savings accounts. 

The second layer is short-term reserves, where the focus is still on stability but with a bit more room to earn, often through low-risk Shariah-compliant funds or similar options.

The third layer is deployable surplus, which you’re unlikely to need in the near term and can position more deliberately, including options like sukuk funds. Thinking in layers like this helps you stay flexible while giving each portion of your money a clear role.

Final Thought: From Idle to Intentional

Cash that starts as a safety buffer often turns into a default resting place. True liquidity management involves graduating from basic holding to intentional, goal-oriented positioning. Some of it supports your day-to-day needs, some of it protects you against uncertainty, and some of it can be positioned with a longer view in mind.

The strength of your cash strategy lies in placing funds where they naturally fit your ethical standards, your liquidity requirements, and the specific rhythms of your financial life.

If you’re deploying £25,000 or more, access is no longer the problem; the UK market gives you plenty of ways to invest. The constraint is knowing where your capital actually belongs, and whether the structure behind each option holds up under Shariah scrutiny.

In the UK, you have access to tax wrappers like ISAs and pensions, along with a growing range of Islamic investment options. That does sound helpful on paper, but it does not remove the need to think carefully about structure. Two investors can use the same wrapper and still end up with very different outcomes depending on what they actually hold and how their capital is deployed.

At this level, investing becomes a question of placement and structure. Where your capital is deployed, how it behaves, and how each layer fits together financially and from a Shariah perspective is what determines whether the portfolio works as intended.

What Does Halal Investing Actually Mean?

Halal investing, in practical terms, means deploying capital in a way that aligns with Shariah principles across how money is earned, how risk is taken, and what you are actually exposed to.

It is not just about avoiding interest. It is about structure, ownership, cash flow, and the nature of the underlying activity. You are participating in an asset, a business, or a financing structure where returns are tied to real economic activity and shared risk.

Most complexity tends to cluster at this stage of the process. A product can appear acceptable on the surface and still raise issues once you look at how returns are generated, how leverage is used, or what portion of income comes from non-permissible sources. The label alone does not carry much weight without understanding the underlying mechanics.

In the UK context, this is even more important because many mainstream investment vehicles were not designed with Shariah compliance in mind. As a result, halal investing becomes less about finding a single “approved” option and more about assessing how each investment is built, what it gives you exposure to, and whether that exposure holds up when you look a layer deeper.

The Core Shariah Principles You Need to Know

At this level, you only need clarity on the factors that affect how your capital is deployed.

Riba (Interest)
Any guaranteed return on money purely for the use of money falls under riba. This is why conventional savings accounts, bonds, and most fixed-income instruments are excluded. The issue is not just the presence of interest, but the fact that return is detached from real economic activity or shared risk.

Haram Sectors
Certain industries are off-limits regardless of how profitable they are. This includes alcohol, gambling, adult entertainment, and conventional financial services built around interest. Equity screening often triggers these exclusions, where even robust companies fail to qualify because of a fraction of their income streams.

Gharar, Maysir, and Risk
Excessive uncertainty and speculation are not permissible. This is where derivatives, options, and many leveraged instruments come into focus. For investors deploying larger amounts of capital, this is crucial because these tools are often used for hedging or return enhancement in conventional portfolios, but they introduce structures that do not align cleanly with Shariah principles.

Halal vs Haram: Which Asset Classes Can You Invest In?

Not all asset classes are treated the same under Shariah. What matters is how returns are generated, what is present underneath the investment, and the way risk is shared.

Here’s how the main asset classes typically map:

Effective Shariah-compliant allocation requires a deep dive into the underlying architecture of an asset rather than relying on a binary "allowed" or "not allowed" classification. Two investments in the same category can be treated very differently once you look at how returns are generated and what your capital is exposed to.

Are Popular Index Funds Halal?

Popular index funds like the S&P 500 or Nasdaq are not automatically halal. In their standard form, they include companies that generate income from interest, operate in non-permissible sectors, or carry levels of debt that fall outside Shariah thresholds.

This is where the issue tends to get missed; the index itself is not screened. It is designed to represent the market, and not to filter it. So even if a large portion of the companies may appear acceptable at a glance, the overall exposure does not meet Shariah requirements once you examine the underlying composition.

There are, however, screened alternatives. These are indices and funds that apply Shariah filters to remove non-compliant companies and apply financial ratio thresholds. You’ll find versions of global equity indices that follow this approach, along with ETFs and managed portfolios built around them.

The tradeoff is in diversification. A screened index will typically have fewer companies and less exposure to certain sectors, particularly financials. That can change how the portfolio behaves compared to a conventional index, especially over shorter periods.

For most investors, the decision is about deciding how much deviation from the conventional market you are comfortable with in order to maintain compliance.

How to Screen Individual Stocks for Shariah Compliance

Once you move beyond funds and into individual stocks, the question becomes simpler in one sense and more nuanced in another. The focus moves toward evaluating individual company fundamentals to determine their suitability for a Shariah-compliant portfolio.

At a high level, you are looking at two things. What the company does, and how it is financed. A business can operate in a permissible space and still fall short because of how much of its income or balance sheet is tied to non-compliant elements.

Most investors use a set of widely accepted thresholds to make that call.

The Three Thresholds

Shariah Screening Benchmarks (Commonly Used)

• <5% non-permissible income
  A small portion of revenue can come from non-compliant sources, but it must remain limited and typically requires purification.
  
  
• <33% debt (to market cap or assets)
  The company should not be heavily reliant on interest-based financing.
  
  
• <33% cash / receivables
  This helps ensure the business is tied to real economic activity rather than primarily financial assets.

These benchmarks provide a functional middle ground, respecting how businesses scale today while maintaining a hard line on Shariah integrity.

What begins as a series of checks eventually becomes a fundamental way of seeing and interpreting asset structures. You start to see how businesses generate income and where potential issues might emerge before you even look at the numbers.

A Note on Purification and Zakat

Even with screening, some level of non-compliant income can still pass through a portfolio. This is typically small and within accepted thresholds, but it does require purification. Identifying the non-compliant portion and donating it ensures that no prohibited earnings are retained as part of the investment return.

As portfolios grow, Zakat also becomes more relevant. Listed equities, cash balances, and certain fund holdings may all fall within scope depending on how they are structured. The calculation can vary based on asset type and intent, so it’s worth reviewing this periodically to ensure it reflects your actual exposure.

Halal Investing for High Net Worth Individuals and Businesses

The conversation changes once you’re deploying larger amounts of capital. Managing wealth at this scale requires a transition toward optimizing how different accounts and tax structures interact as a unified system.

At this level, small inefficiencies compound, but so does poor structuring. The goal is to ensure that capital is placed in a way that remains compliant, tax-aware, and operationally clean over time.

Tax Efficiency and Wealth Structuring

In the UK, wrappers like ISAs and SIPPs can play a useful role, but they don’t determine whether an investment is halal. They simply change how returns are treated from a tax perspective. The true value resides in the underlying assets held within them. 

An ISA can be used to hold screened equities or Islamic funds, allowing gains and income to grow tax-free. A SIPP can offer long-term compounding with tax relief, but again, the underlying investments must be compliant. For larger portfolios, this becomes a question of placement across accounts rather than selecting a single product.

There’s also a longer-term consideration around inheritance and transfer. Structuring investments in a way that is clear, accessible, and aligned with Islamic inheritance principles becomes part of the picture as capital grows.

Disclaimer: Tax rules and eligibility can change, and their application depends on individual circumstances. This is not tax or financial advice. It’s worth speaking to a qualified advisor before making decisions at this level.

Halal Options for Business Cash Reserves

For businesses, the question often starts with idle cash. Holding large balances in conventional accounts introduces immediate compliance issues, but leaving capital unused carries its own cost.

Shariah-compliant business accounts and deposit structures offer a way to hold liquidity without earning interest, and in some cases, to generate expected profit through permissible financing structures. There are also Islamic funds that can be used for short- to medium-term allocation, depending on liquidity needs.

The key here is to treat business cash with the same discipline as personal capital. It needs a place to exist, a role to play, and a structure that holds up under scrutiny.

UK Halal Investment Options: What’s Available Right Now

The UK market has matured enough that you’re no longer limited to a single type of product. You can now allocate across platforms, banks, and funds depending on how much capital you’re deploying and how liquid you need it to be.

What matters now is how each option behaves in practice. Minimums, access, and liquidity vary quite a bit, especially once you move beyond entry-level platforms.

Here’s a structured view of what’s currently accessible:

You’ll notice the spread. At the higher end, you’re looking at structured property or bank-based products with fixed terms and clearer income expectations. As you move down, you get more flexibility and liquidity, but returns become market-driven and less predictable.

There isn’t a single “best” option here. The role each plays depends on what you’re trying to do with that portion of capital. Some of it needs stability. Some of it requires growth. The structure comes from how you combine them.

How to Build a Halal Investment Portfolio

If you’re deploying £50,000, the goal is to spread capital across roles so that the portfolio can hold up over time.

A simple structure might look like this:

• £20,000 in screened equities
  This is your growth engine. You’re taking exposure to businesses that can compound over time, with the understanding that returns will fluctuate.
  
  
• £15,000 in sukuk or sukuk-based funds
  This adds stability and income. It won’t behave like equities, and that difference is useful when markets move.
  
  
• £10,000 in property or property-linked investments
  This gives you exposure to real assets and rental-based income, either directly or through a structured product.
  
  
• £5,000 in cash or Islamic savings
  This is your liquidity buffer. It gives you flexibility without forcing you to sell other assets at the wrong time.

The exact split can change, but the idea holds. Each part of the portfolio has a role. Growth, income, stability, and liquidity are all covered, and capital is not overly concentrated in a single type of exposure.

How Risky Is Halal Investing?

Halal investing operates within a smaller investable universe, and that has real implications once you’re deploying larger amounts of capital. You are working with fewer companies, limited exposure to certain sectors, and a narrower set of instruments compared to a conventional portfolio.

This can introduce concentration risk. For example, the absence of conventional financials and certain highly leveraged businesses means your equity exposure may lean more heavily toward specific sectors like technology or healthcare. That can change how your portfolio behaves relative to the broader market.

There are also trade-offs in flexibility. Tools commonly used in conventional portfolios to manage risk or enhance returns, such as derivatives or structured products, are either limited or not available in a compliant format.

None of this makes halal investing inherently riskier. However, it does change where the risks are, and how they need to be managed - especially when larger amounts of capital are involved.

Frequently Asked Questions (FAQs)

What investments are halal?

Investments are generally considered halal when they avoid interest-based income, stay clear of non-permissible sectors, and are structured around real economic activity. This includes screened equities, sukuk, property, and certain Islamic financial products.

How do I invest my money in a halal way?

You start by choosing compliant asset classes, then apply screening where needed, and finally structure your capital across appropriate accounts or platforms. The focus is on how your money is allocated and how returns are generated.

Is the S&P 500 halal?

In its standard form, no. It includes companies that do not meet Shariah criteria. There are screened alternatives that apply compliance filters to create a permissible subset of the market.

Which UK bank is best for Muslims?

Banks like Al Rayan and Gatehouse offer Shariah-compliant products. The better choice depends on what you need, whether that’s liquidity, expected profit, or access to specific types of accounts.

Is Apple or Tesla halal?

It depends on screening. You would look at sector exposure, income sources, and financial ratios such as debt and non-permissible income. The answer can change over time as company financials evolve.

Can a business invest in halal products?

Yes. Businesses can place surplus cash into Shariah-compliant accounts, funds, or financing structures. The same principles apply, but with more focus on liquidity and operational flexibility.

Are ISAs and SIPPs halal?

They can be used in a halal way, but they are not inherently halal. The wrapper is tax-related. Compliance depends entirely on the investments held within them.

How risky is halal investing at scale?

Risk shifts rather than disappears. A smaller investment universe and limited instruments can lead to concentration, so larger portfolios require more deliberate allocation and ongoing oversight.

Conclusion

Once you reach this level of capital, investing becomes a question of structure rather than access. The UK market gives you enough options to build a compliant portfolio, but it does not make the decisions for you.

Clarity on where your money sits, how each component behaves, and how everything fits together is what turns capital into something that can compound without friction. Without that, even well-intentioned investments can drift out of alignment over time.

If you’re working with meaningful capital, it’s worth taking the time to map this properly. That can mean reviewing your current setup, speaking to a qualified advisor, or exploring platforms and products that fit the role each part of your capital is meant to play.

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INTRODUCTION

‍Cryptocurrency is essentially a digital currency exchange and digital payments platform that uses blockchain technology. The technological and digital revolution over the last few decades has meant that innovative payment systems have been created and utilised, and cryptocurrency is one of the major breakthrough payment systems for business and personal finance use. Whether or not cryptocurrency is halal or haram is a debate that is ongoing between Islamic scholars.This article will examine cryptocurrency, Islamic interpretations, and the types of cryptocurrencies available.

CRYPTOCURRENCY

Although there are over 2,000 cryptocurrencies on the market now, Bitcoin is probably still the most known form of cryptocurrency in the blockchain market, and was the first cryptocurrency coin to go mainstream but there are other cryptocurrencies entering the market.For Muslims across the Islamic world, the question arises as to whether crypto payment platforms are deemed to be halal or haram in the eyes of Allah and in accordance with Shariah principles, and whether as a currency it prevents money laundering. Whether or not cryptocurrency is halal or haram depends on the how a specific cryptocurrency aligns with the principles of Islam.

CRYPTOCURRENCY - CHARACTERISTICS

One of the defining aspects of cryptocurrency is that there is no central authority such as a Government that authorises it or records it. Cryptocurrencies operate on decentralised networks using blockchain technology.Most cryptocurrencies have a limited supply, or at least a capped supply. Transactions are transparent and traceable, but there is also a degree of anonymity of parties. One the main advantages of cryptocurrency is that it offers global accessibility. It can be received anywhere in the world - all you need is an internet connection.For Muslims, cryptocurrency does tick a lot of the Islamic finances boxes when it comes to transparency and traceability. However, ultimately it is the duty of every Muslim to be seeking knowledge, and this guide will address the use of the cryptocurrency market and its intrinsic value.This article will consider whether crypto currency is permissible as a form of actual money under Islamic laws and in the Islamic world. We will consider the views of Islamic jurists and scholars on this emergence of what is considered to be new money addressing the question of is cryptocurrency halal.

ISLAMIC SCHOLARS INTERPRETATION - IS CRYPTOCURRENCY HALAL?

A comprehensive Islamic law interpretation, one that sparked a massive rise in Muslim investment in Bitcoin and Ethereum in 2018, was provided by Sharia advisor Mufti Muhammad Abu-Bakar (former advisor to Blossom Finance) who looked at the question of is cryptocurrency halal as a money supply. He argued that Bitcoin is permissible under Islamic principles.Mufti Abu-Bakar considered arguments that crypto itself was speculative when it comes to personal finance, but his view was that all currencies have a speculative element and this did not automatically deem cryptocurrency as haram.

CRYPTOCURRENCIES

Islamically, if a business does not have an element of appropriate loss probability within its assets is not strictly trading in a Sharia compliant manner. The Grand Mufti of Egypt, Shaykh Shawki Allam believes that cryptocurrency is haram and he is joined by other Shariah scholars from the Middle East and beyond including Shaykh Haitham Al Haddad who see crypto as high risk. Their argument is based on the notion that crypto itself does not hold enough credibility as a currency to be deemed to be halal.However, many other Sharia scholars believe that crypto itself does confirm to Sharia money rules and Muslims are permitted to invest in crypto.Islamic scholars who believe that cryptocurrency money and digital assets are halal include Ziyaad Mahomed, Shariah Committee Chairman of HSBC Amanah Malaysia Bhd, and Mufti Faraz Adam. These views lend credence to the notion that Muslims can invest in crypto.Arguments in favour of crypto being deemed halal include:

• There is often a lack of riba (interest). Crypto operates on decentralised platforms without any central authority. This usually means there is no interest charged or payable.
• Crypto is used as a medium of exchange with a legitimate purpose in financial and economic transactions.
• Technologically, crypto is neutral. Scholars argue that it is the use of the crypto that determines if it is Sharia compliant or not.
• The fact that crypto is generally thought to be scarce means that it is easier to avoid speculation and uncertainty and this aligns with Islamic finance rules.

ISLAMIC SCHOLARS

As mentioned above, one of the main reasons Islamic jurists and scholars from Muslim countries argue that cryptocurrency is halal, is that the concept of the blockchain and other cryptocurrencies are inherently anti-interest when looked at from a money generation source or perspective. Crypto operates outside of conventional banking systems and interest-based transactions.Islamic banking laws are also anti-interest so the technology, pricing, and buying and selling of cryptocurrency money is deemed halal by many Islamic scholars who rely on the teachings of Prophet Muhammad PBUH when seeking guidance about permissibility (ultimately, only Allah knows best).Given that crypto has a finite supply, it is less likely to be subject to inflation. This means it can maintain a fairly stable value - again an important element of Islamic finance.

CRYPTO BLOCKCHAINS AND ISLAMIC FINANCE PRINCIPLES

Blockchains refer to the blocks of technology used to record digital cryptocurrency transactions. Blockchains act as a system of record and the reason this form of technology is so important is that it is virtually impossible to hack, change or cheat the blockchain platform or marketplace.With the use of blockchain, centralized financial institutions and establishments are not needed as no central control is required. This also means that crypto trading (and the stock market) is more transparent.According to many Islamic scholars and religious leaders, this addresses the question of is crypto halal within Islamic Finance rules and Islamic law more generally.As cryptocurrency money is deemed permissible and halal under Islamic Sharia rules this has unlocked the crypto investment market to a global Muslim community with increasing numbers of Muslims with an interest in buying crypto and use it as a form of currency.In terms of business practices, there are some basic principles (discussed in this article) relating to crypto and cryptocurrency trading that help many Muslims to decide if their entrepreneurial journeys and endeavours are permissible or strictly prohibited.

CONSIDERATION AND COMMERCIAL VALUE - IS CRYPTO HALAL OR HARAM

From the perspective of Islamic contract rules, there must be an element of consideration when answering the question is crypto halal - there must be Mal. Mal refers to possession and effective storage, and cryptocurrencies meet the criteria required as they can be possessed and stored and have commercial value (Mutaqawwam).Crypto is a real and viable digital asset, its worth and value lies in what is paid for it, and it is capable of being owned and traded commercially so the Shariah requirements are satisfied and the the question of is crypto halal can be answered.

SHACKLEWELL LANE MOSQUE

The Shacklewell Lane Mosque in East London became one of the first mosques in the UK to accept cryptocurrency donations and Zakat contributions in 2018 during Ramadan. This mosque deemed cryptocurrency halal and permissible and generated a lot of interest on the topic of the permissibility of crypto more generally under Islamic law.

DIGITAL CURRENCIES, MONEY LAUNDERING AND SHARIAH LAW

‍Islamic finance principles dictates that in order for income, or investing in any product or asset, to be deemed halal it has to meet certain criteria. The principles of Shariah law should be applied to the financial systems we operate in and there has been some discussion amongst Muslim scholars about whether rules devised centuries ago can still be applied to a technologically modern digital financial marketplace.Whether cryptocurrency is halal or haram centres on the rules of Sharia law.Is cryptocurrency halal? For many Islamic scholars, the answer quite simply is yes. Shariah principles can be applied to modern crypto analysis and digital currencies as they are based on social justice, accountability and ethics which transcend all forms of financial transactions. As long as there is no illegal activity, then trading or investing in crypto should not be deemed to be contrary to Shariah principles.

INVESTMENTS, ISLAMIC BANKING LAW AND ILLEGAL ACTIVITIES

There has been some discussion amongst Muslim scholars around the use of cryptocurrencies for illegal activities such as gambling, drugs, and money laundering. Critics of Bitcoin also argue that it is not legal tender as it is not backed by any central government that assigns its value and maintains regulatory standards, and it is therefore deemed to be speculated trading.However, Islamically the use of an item that is deemed halal for an unlawful purpose does not make the original item halal. Whether it is halal or haram depends on the multiple factors.

CURRENCY OWNERSHIP

Ownership of the currency remains with the owner according to Muslim scholars, and the coins/tokens are kept in an e-wallet. This means that investors can take part in trading as and when they want, retaining control of their assets.As mentioned above, the publication of the working paper conducted by Mufti Muhammad Abu Bakr clearly identified that cryptocurrency is permissible under Shariah rules.For Muslims worldwide this could have huge implications for the payment of Zakat monies that are made to the poor and to charities globally. If Muslims make up 25% of the world's population and hold approximately £1.04 billion in bitcoins, this means that £26 million is due in Zakat contributions. [1]

MEDIUM OF EXCHANGE

Cryptocurrency operates as a medium of exchange across the globe. This means that it can operate in legally diverse and unpredictable environments, often making it more accessible than mainstream finance options. It is a valid form of currency that holds purchasing power.Although vulnerable to market changes, crypto coins such as Bitcoin and Ethereum are deemed to be a legitimate medium of exchange, available for use in transactions and trading. Although crypto has not yet reached the status of being a globally accepted medium of exchange, it is fair to say that it is on the way to becoming so. Commentators expect crypto to appreciate over the course of time and to store value.

CRYPTOCURRENCY GUIDELINES

The development of Shariah compliant cryptocurrency guidelines provides Muslims with the opportunity for ethical investments. From a financial perspective, Islamic charities could benefit hugely from Zakat and other donations as a result of crypto investment.Many banks and financial establishments globally are recognising crypto as a financially viable medium of exchange, and this makes it easier for investors to continue to trade, buy and sell cryptocurrency.With billions of Muslims worldwide, and the growth of crypto, it seems clear that what is perhaps needed is some form of shariah compliant cryptocurrency guidelines for Muslims to follow. This would enable Muslims to assess themselves the validity of cryptocurrency when assessed against Islamic finance rules.

CONTRACTS

In terms of whether contracts relating to crypto are Shariah compliant, given that the contractual relationships in crypto are based on smart contracts using blockchain technology, this means that the process can be made increasingly secure and automated.This not only reduces administrative complexities, confusion and errors, but also ensures that banks are more likely to accept the contractual relationships created. In demonstrating Shariah compliance, cryptocurrency is earning legitimacy across the Islamic finance world. Cryptocurrency agencies are springing up across the Muslim world such as One Gram in Dubai, and Hello Gold in Malaysia.This adds further legitimacy to the rulings that cryptocurrency is halal and can be utilised by Muslims and Islamic financial institutions. Of course, there needs to be ongoing discussion to consider is crypto halal as it operated within a dynamic and changing industry.As the crypto market continues to evolve more questions will need to be asked, and each crypto coin should be analysed against Islamic finance principles to check for permissibility. However, as things stand right now, crypto is recognised as an asset under Sharia law and this lends it legitimacy. The things to be careful of are making sure that any cryptocurrency you are involved in does not link to any haram things and industries or activities or any form of money laundering.Whilst there is no central body who can make a final ruling on whether crypto is halal or haram, but as there is no element of interest (riba) and no exorbitant fees relating to crypto the interest from Muslims is growing. Crypto can be used within Islamic finance principles to make ethical investments and wealth management in a Shariah compliant way. This could unlock the cryptocurrency investment market to billions of Muslims worldwide who are looking to enter the crypto market as investors.As the currency is still in its infancy it is important to keep an eye on all new developments and to assess and analyse changes in the market

Source:
[1] https://www.independent.co.uk/life-style/gadgets-and-tech/news/bitcoin-halal-london-mosque-donations...

WHAT IS ISLAMIC FINANCE?

Islamic finance is a financial system based on Sharia principles - the religious law enshrined within Islam. Islamic finance offers an alternative financial system to the conventional systems, and is based on fairness, transparency, and social justice.

WHO USES ISLAMIC FINANCE?

Islamic finance is a growing industry and is used extensively by Muslims throughout the world. However, more and more non Muslims are also looking at Islamic finance services as they want to operate in a more ethical way.

DO MUSLIMS PAY INTEREST IN THE UK?

Whilst Muslims are discouraged from paying or earning interest in any form under Islamic finance rules, many Muslims in the West do pay interest. However, more and more Muslims are becoming aware of alternative financial systems and products that enable them to access loans and financial services that are compliant with Sharia law.

CAN MUSLIMS TAKE LOANS?

Yes, of course. Taking a loan is not prohibited in Islam. However, it is important to ensure that the loan terms are compliant with Sharia rules.

HOW DO ISLAMIC LOANS WORK?

Islamic loans are structured and developed to ensure they are halal - that is they do not contravene any rules in Islam relating to finances. For example, an Islamic loan will not have any element of interest attached to it.

WHY CAN'T MUSLIMS EARN INTEREST?

In Islam, interest is seen as exploitative as it leads to the lender making a profit at the expense of the borrower. Islam views interest as the unfair accumulation of the wealthy and this can lead to financial distress for those who need to borrow money. Interest is viewed as being against the promotion of social justice and economic fairness which are key concepts underpinning Islamic finance.

WHAT IS HARAM IN ISLAMIC FINANCE?

The following are deemed haram in Islam: riba/interest, gambling, excessive uncertainty, investment in haram industries or practices.

WHAT IS ETHICAL FINANCE?

While there is no universally accepted definition of ethical finance, the Ethical Finance Hub describes it as "A system of financial management or investment that seeks qualitative outcomes other than purely the management of returns. Outcomes sought may reflect ideas from faith, social, environmental and governance theories."

IS ISLAMIC OR SHARIA-COMPLIANT FINANCE ETHICAL?

The World Bank mentions that Islamic finance is ethical, sustainable, environmentally and socially responsible finance. It promotes risk sharing, connects the financial sector with the real economy, and emphasizes financial inclusion and social welfare.While there is no universally accepted definition of ethical finance, the Ethical Finance Hub describes it as "A system of financial management or investment that seeks qualitative outcomes other than purely the management of returns. Outcomes sought may reflect ideas from faith, social, environmental and governance theories."