The name “Binance” is not a legitimate app or any other means of engaging in business in cryptocurrencies, and the profit obtained from it is also not lawful. Therefore, in the case mentioned, joining a competition called Binance, trading through it, and profiting from it is unlawful and haram. “Encyclopedia of the Problems of Trade” says: “Bitcoin” is merely a fictional currency; it does not have the basic essential characteristics and conditions of real currency. Therefore, in the present era, the business being carried out on the internet and in electronic markets in the name of buying and selling ‘coins’ or ‘digital currency’ or ‘cryptocurrency’ is not halal or lawful—it is nothing but deception. In reality, there is no tangible thing in it, and there is no possession (قبض) at all—only some numbers are added to an account. And it is a form of interest (riba) and gambling like forex trading. Hence, investing money in the so-called business of ‘Bitcoin’ or any ‘digital currency’ and taking part in buying and selling is not lawful. (Ref: (ج:2،ص:92،ط:بیت العمار)) In the Noble Qur’an it is stated: “O you who believe! Indeed, intoxicants, gambling, [sacrifices on] stone alters, and divining arrows are only an abomination of Satan’s work. So avoid them that you may be successful.” [Al-Ma’idah 90] Translation: “O believers! The matter is exactly this: wine and gambling and idols and divining arrows—everything like that—are filthy Satanic deeds; so keep away from them completely so that you may attain success.”
In Fatawa Shami it is stated: “(باطل بيع ما ليس بمال) … (والمعدوم كبيع حق التعلي) i.e., knowledge is insignificant; because it is nonexistent. (The statement: ‘the nonexistent is like selling the right of elevation’) The author of al-Fath says: If a person has the upper part and another has the lower part, and they fall down or only the upper part falls, then the owner of the upper part selling his upper part is not permissible, because at that time what is being sold is only the right of elevation, and the right of elevation is not property (مال). Because property is an entity that can be acquired and held, and it is not a right related to property—it is a right related to air. And air is not property that can be sold, and what is sold must necessarily be either of the two (things).” (Kitab al-Buyu‘, chapter on invalid sales, vol. 5, p. 50, publisher: Sa‘id) It also says: “(The statement: ‘either مال or not’) etc. The intended meaning of ‘property (مال)’ is what can be stored for the time of need, and ‘financial value’ is established by the fact that people make it valuable/they treat it as valuable—either all of them or some of them. And entitlement to benefit is established by its being permissible to benefit from it in Shari‘ah. So what is permissible without people treating it as valuable is not property, like a grain of wheat; and what is treated as property without it being permissible to benefit from it is not considered valuable, like wine. If neither of these conditions exists, then neither of them is established—like sea-blood. Summarized from al-Kashf al-Kabir. Its result is that property is broader than that which has financial valuation: property is what can be stored—even if it is not permissible, like wine—whereas something with financial valuation is what can be stored with permissibility. Wine is property but not financially valued. … Also, in Talwih, regarding discussion of judgment (قضاء): ‘The investigation is that benefit is ownership, not property. Because ownership is something that is fit to be dealt with by virtue of being attributed/qualified, whereas property is what can be stored for benefit at the time of need; and valuation requires financial value for the imam … and in the book from al-Bahr about al-Hawi al-Qudsi: property is the name for non-human things; created for the interests of human beings; it can be acquired and disposed of by choice. The slave—even though there is a sense of financial value in him—is not property in reality, so killing and destroying him is not permissible.’ (Kitab al-Buyu‘, vol. 4, p. 501, publisher: Sa‘id) In Islamic jurisprudence and its proofs it is stated: “Among the Hanafi scholars, ‘property (مال)’ is intended to mean what naturally inclines the temperament and can be stored for the time of need, and financial value is established by people treating it as property—either all or some of them. The professor Zuhayla/az-Zarqa‘ criticized this definition and replaced it with another definition. He said: ‘Property is every physical thing that has material value among people.’ Therefore, benefits and pure rights are not considered property among the Hanafis.” (al-Fiqh al-Islami wa Adillatuhu, (القسم الثالث، فصل اول، مبحث اول، مطلب اول، ج:5، ص:3305، ط: دار الفكر)
Binance is a crypto-currency trading exchange that has obtained a license to provide crypto trading services in various countries of the world. There are different forms of trading on it, the ruling of which has been mentioned in detail as follows: 1. Futures trading: In reality, this involves no actual transaction; rather, profit and loss are matched according to the price movement. Since it is gambling (قمار) from the Shari‘ah perspective, it is haram and its income is haram. 2. Options trading: In this, the option to buy or sell something is sold, and a premium is taken for it. Since this “option” is not the actual sold item, it is also unlawful, and its income is haram. 3. Margin trading: In this, trading is done by taking a loan from Binance with interest. The transaction involving interest is haram in the Shari‘ah. However, the ruling on the profit from it is the same as spot trading, which is mentioned ahead. 4. Spot trading: In this, coins and tokens are traded according to the current price. The details of coins and tokens are as follows: Coins: Coins are generally called the crypto assets that have their own separate blockchain, such as Bitcoin, Ethereum, BNB, Solana, Tron, etc. They are used to pay the fees for every transaction on their own blockchain. These fees are given to the members who verify transactions (transactions, recording of other data). Often, the blockchains of many coins also provide the facility to build various projects (software running on the blockchain) on them. In those projects too, the fee for the data that is transferred and stored is paid in the coins. Some coins are also used in certain regions of the world as money with government permission—for example, Bitcoin can be used as money in “El Salvador” and “Lugano (Switzerland),” and it is also being used for imports in Iran.
Token: A token is called the crypto asset that is connected to a project. It may be a company, or it may be software running on a blockchain—such as the “Ava” token which is related to the “Travola/Travela” company that provides hotel and flight booking facilities worldwide, and the “Storage” token which is related to a project that provides storage for computer data on a blockchain. The first token is for a centralized (owned by one person or a few people) company, whereas the second token is for a decentralized project (operating without ownership). Tokens then have five further types:
1. Leverage tokens: These tokens are not on the blockchain; rather, different exchanges create them. They are formed on the basis of futures trading contracts. Their trading is also haram because it is essentially gambling, and the income is also haram. 2. Meme coins: These are generally tokens, but sometimes they are full coins that have their own blockchain. Their origin was from the “Doggy/Dog” coin, which has its own blockchain and was created to mock Bitcoin by making a “meme.” Later, due to transactions, its price came into existence. There is no underlying project behind them. Sometimes some tokens are such that their project has not yet been built but there is a promise that it will be built in the future. Sometimes they are considered “meme coins” and sometimes they are not. 3. DeFi tokens: These are tokens of decentralized finance—meaning their project provides services related to the field of finance, but this system runs on the blockchain unlike the normal banking system, and complete authority depends on the voting of token holders rather than being in the hands of a single company. They can include many types of services, from interest-bearing loans to even exchanges—some lawful and some unlawful. 4. Utility tokens: These are tokens for projects that provide services other than finance, such as video streaming, audio streaming, web3, gaming, storage, etc. Then, within these two types (DeFi and Utility) there are a further three kinds of tokens used to obtain the project’s services: b. Tokens used for voting when different parameters are changed in the project, because being decentralized means the team managing the project cannot make decisions alone. Sometimes the token holder receives a share in profit and sometimes they do not. The reason for not receiving a share of profit is often that in these projects there is no profit-sharing system. c. Tokens that are used for both services and voting. 5. Stablecoins: These are tokens whose price remains approximately equal to the currency they are linked to—for example, Tether (USDT) stays close to the value of the dollar. They have two types: a. Stablecoins that are backed by the required currency and other securities. Their creators issue regular financial statements. b. Stablecoins that maintain their closeness to the desired currency through complex mathematical and economic mechanisms. Usually, crypto assets back them. These are called “algorithmic stablecoins,” and a well-known example is the “DAI” coin.
Because of the above details and their complex forms, the elaboration regarding their ruling is as follows:
5. The trading of these tokens that have an unlawful (for example, interest-bearing loans or hedging, etc.) project behind them. Since their use is also extremely connected to that project, their trading and the profit obtained from it are also not lawful.
6. Trading in those coins and tokens whose underlying project is not unlawful. Regarding them, the scholars (mufassirs/muftis) have different views. Most scholars lean toward it being unlawful due to reasons such as the absence of government backing behind it, the absence of being a currency (ثمن), or its use in speculation (staysh/casino-like speculation). Since there is no disagreement that forgery is common under this heading and people suffer significant losses, the advice from our side is to avoid dealing in it as well. If someone has earned profit from its trading in the past, then put that profit aside and act according to it only after a final view becomes clear. Also, it should be considered that if the government places a ban on it, then since following the government’s law based on public interest is obligatory in Shari‘ah, it will be necessary to avoid it.
Islamic conditions