CRYPTOCURRENCY AND ISLAMIC ETHICS: A SCHOLARLY APPRAISAL OF OPPORTUNITIES AND CHALLENGES

Abstract

Over the last few years, debates regarding cryptocurrency have become extremely popular among both scholars and ethicists, but most notably, in the area of Islamic Finance. This research will examine how these conversations are evolving, by combining the perspectives developed from a Multi-Expert Forum held by the International Open University (IOU) with responses received from academics and practitioners who work in the area of cryptocurrency, through an open-ended questionnaire. It also provides evidence of a diverse set of views, as opposed to a singular position. There are a number of respondents who see great promise in blockchain and other distributed ledger technologies, primarily because of the potential for decentralized systems, and in developing asset-based crypto models. In contrast, a large number of participants felt a sense of instability from the nature of speculative gharar (speculation) in digital currencies, in addition to the absence of tangible or intrinsic value in digital currency. Additionally, an ethical dilemma arose when discussing digital currency usage in unregulated marketplaces or when engaged in illegal activities. Regardless of their viewpoint on the issue, all of the participants agreed that engaging in digital currencies should be done with extreme care and with caution; and that digital currency engagement should be regulated. A large number of the participants suggested the need for increased regulation of digital currency and greater collaboration among scholars so that the Islamic ruling process regarding digital currency will be both credible and proactive rather than reactive. This research has also demonstrated the need for educational opportunities to enable communities to be aware of the digital economy and have the knowledge and confidence to engage with it while maintaining the ethical and moral principles of Islamic finance.