ISLAMIC FINANCE AND CRYPTOCURRENCY: EXAMINING THE SHARIAH COMPLIANCE OF DIGITAL ASSETS, BLOCKCHAIN TECHNOLOGY, AND DECENTRALIZED FINANCE (DeFi) WITHIN ISLAMIC FINANCIAL PRINCIPLES
Abstract
The rapid rise of cryptocurrencies presents challenges in reconciling their decentralized, speculative nature with the principles of Shari’ah prohibiting Riba (interest), Gharar (excessive uncertainty), and Maisir (gambling). Islamic finance, rooted in ethical and risk-sharing models, faces scrutiny over whether digital assets align with its foundational tenets. This paper examines the Shari’ah compliance of cryptocurrencies, blockchain, and decentralized finance (DeFi) within Islamic financial frameworks. Using qualitative analysis of scholarly opinions, fatwas, and regulatory stances, the study finds divergent views but identifies potential pathways for harmonization. It recommends standardized Islamic crypto regulations and state-issued digital currencies to balance innovation with Shari’ah adherence. The conclusion affirms that with structured oversight, cryptocurrencies can integrate into Islamic finance while upholding its ethical objectives.
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