The highest ranking Islamic official in Egypt has stated that virtual currencies are incompatible with Sharia Law.
Local sources in Cairo are reporting that Egypt’s grand mufti, Shawki Allam, issued a fatwā on New Year’s Day that classifies the use of cryptocurrencies as incompatible with Sharia Law. The decree is not universally binding but is a highly influential interpretation of Islamic law.
Per Ahram Online, Allam said he met with several economic experts before reaching a final verdict, which was that the trade, purchase, and sale of “digital currencies” is not permissible, adding that cryptocurrency “impinges on the state‘s authority in preserving currency exchange, as well as its necessary supervising measures on domestic and foreign financial activities.”
The grand mufti’s remarks come on the heels of recent commentary by Egypt’s Financial Regulatory Authority which stated last month that the alluring enticement of investors into cryptocurrencies represented a “form of deception that falls under legal liability.”
The grand mufti elaborated on his position by stating many of the typical concerns surrounding cryptocurrencies including their cryptographically controlled issuance, lack of central authority and regulation by financial institutions, and their ability to mask users’ identities.
Per Egypt Today, the aforementioned meeting between the grand mufti and his expert economic advisers resulted in the following conclusions:
“1. A deep study on Bitcoin and other digital currencies in the exchange market is needed to control it.
2. Exchange markets of these kinds of currencies are very risky, as it is difficult to predict prices and value due to its extreme volatility and fluctuations. In addition, brokers could benefit from these fluctuations to attract investors to use these currencies. This leads to weakening a country’s ability to preserve its local currency and control the currency exchange. It also negatively affects the financial policy and the expected fiscal revenues of states, and it opens the door for tax evasion.
3. Selling and paying Bitcoin requires encryption techniques to regulate the generation of units and verify the transfer of funds, making it necessary to produce backups to sniff out online piracy and to maintain it from theft or damage through the infection of serious viruses, making them unavailable to be circulated among the public easily.
4. It is not recommended to be used as a safe investment as it deals on the basis of speculation, aiming to achieve extraordinary profits by selling or purchasing, making it extremely volatile, and face piracy.
5. Unlike bonds and equities, problems that occur will be the complete responsibility of the miner, or the person who owns the currency, which may lead to them losing their whole capital.
6. Bitcoins undermine the legal system, as companies can evade taxes and not disclose their profits due to the fact that Bitcoins are untraceable. Furthermore, companies turn their attention to crypto currencies as it allows them to launder money or finance terrorist activities and engage in other fraudulent behaviors.”
Using the meeting with his economic experts as a guide, Grand Mufti Allam determined that cryptocurrencies lead to corruption and fraudulence in both the behavior of banks and the tokens themselves, which have ambiguous intrinsic value.
Jordan Daniell is a writer living in Los Angeles. He brings a decade of business intelligence experience, researching emerging technologies, to bear in reporting on blockchain and Ethereum developments. He is passionate about blockchain technologies and believes they will fundamentally shape the future. Jordan is a full-time staff writer for ETHNews.
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