Dr. Farrukh Habib

Founder & CEO, Azka Advisors (UK)

Co-Founder of Alif Technologies (Dubai)

https://www.linkedin.com/in/drfarrukhhabib/

Fiqh of Cryptos

Recently, a fatwa on cryptocurrency had gone viral from which it is interpreted that crypto assets are not property (mal) at all, but simply ‘imaginary numbers’ in a ledger. This write-up is a humble review of that Fatwa to clarify some misunderstandings.

The original plan was a single paper. But, the more I worked through the underlying questions, the clearer it became that they do not compress into one document, at least not one anyone would actually read. Whether crypto assets exist in a sense Shar’iah recognizes, whether they count as mal, what kind of mal they might be, how they should be classified, and what all of that means for mining, staking, and trading — each of these is a substantial question in its own right, with its own evidence and its own literature. Treating them as one topic flattens all of them.

So instead: a series. I’m calling it Fiqh of Cryptos. Each part will take up one question, argue it properly, and stop. The next part will build on it.

Who this is for

It is written not only for scholars and researchers, as I first said. This series is written for anyone with a genuine stake in getting these questions right: Islamic bankers, Shar’iah scholars, crypto and fintech professionals, academics, students, traders, and start-up founders working in this space, along with anyone simply trying to think it through carefully. Where a technical term from Fiqh is needed, I will use it and explain it. I am not writing down to anyone, but I am also not assuming a madrasah education. Precision and accessibility are not in tension here; they are both the point.

Method

A few commitments, stated up front so they do not need repeating in every part:

• The primary evidence is classical — the texts, definitions, and reasoning of the four schools of Islamic law, engaged on their own terms.
• Contemporary fatwas, institutional standards, and scholarly opinions — whether from individual muftis, AAOIFI, the IIFA, or national Shar’iah advisory bodies — are read closely and taken seriously, but treated as positions to be examined against classical principles, not as settled authority in themselves. Where they differ, I will say so plainly and try to show why.
• Where the schools of Fiqh disagree with one another, the disagreement will be shown, not smoothed over. Some questions in this space turn out to depend quite a bit on which school’s starting definitions you use, and that is worth understanding rather than hiding.
• This series is not a rebuttal to anyone. It is an attempt to reason through difficult, genuinely open questions in the spirit of scholarly discussion that our tradition has always encouraged — with full respect for those who have written on this before, including where I will end up disagreeing with parts of their conclusions.

What this series is not, at least not yet

It is not, for now, a set of rulings on specific coins or tokens. “Is Bitcoin halal,” “is USDT halal,” “is staking on this or that platform permissible” — these are exactly the kind of asset-by-asset, use-by-use questions I said needed answering in my last piece, and they still do. But they can only be answered honestly once the foundational questions are settled first: what these things are, before what should be done with them. Jumping to verdicts without that foundation is, I think, part of what has gone wrong in some of the existing commentary on this topic. This series builds the foundation first.

Where we’re starting

The first real question, and the most basic one: do crypto assets even exist in a sense Shar’iah recognizes, or are they — as some have argued — nothing at all? That’s Part 1. From there, the series will move toward whether they qualify as mal, what type of mal, how they should be classified, and eventually toward mining, staking, and trading. The exact path will develop as we go rather than being fixed in advance; some questions may need more than one part, and some may raise others I haven’t anticipated yet.

Fiqh of Cryptos — Part 1: Are Crypto Assets Non-Existent (Madoom)?

The most common objection to crypto assets in Shar’iah discussions is not about risk. It is not about volatility either. It is more basic than that. The objection says there is no ‘thing’ here to judge in the first place. A crypto asset, based on this view, is not property that happens to be risky. It is not property at all. It does not exist. It is only an imaginary or a fictional number in a database, created by a computation. And numbers in a database are not wealth or assets (mal).

If this premise is correct, every later question is already settled. Is a crypto asset property (mal)? Does it carry financial or economic value (maliyyah) in the Shar’iah sense? Is it a form of wealth Shar’iah recognizes (mutaqawwam)? None of these questions need to be asked if the object itself does not exist.

This is why this series begins here. Before property. Before value. Before any ruling on a specific coin. If crypto assets are genuinely non-existent (Madoom) in the technical (fiqhi) sense the jurists use, then everything else follows from that one fact. So, the only honest way to start is to ask what Madoom actually means in the classical fiqh texts. Then we can test the claim against that meaning, not against a general impression.

1. What Madoom Means

Madoom (المعدوم) is the simple opposite of existent (mawjood, موجود). The Kuwaiti Encyclopaedia of Islamic Jurisprudence (الموسوعة الفقهية الكويتية) opens its entry on this term with exactly this contrast, before it turns to any fiqh school’s specific view [1].

In the Islamic law of contracts (fiqh al-muamalat), the term has a narrow, technical meaning. It describes a specific object that does not yet exist when the contract is made, but that may come into being later. Next year’s fruit is one example. Before the fruit grows on the tree, it simply does not exist yet, and a seller cannot hand over a fruit that has not grown. The unborn future offspring of an animal is another example, for the same reason. It does not exist yet, and nobody can be certain it ever will.

A related category is called ‘that which carries the risk of non-existence’ (mā lahu khaṭar al-ʿadam). This covers objects whose present existence is uncertain, such as an unborn animal still inside its mother’s womb. Nobody can be sure, at the moment of the sale, that the animal will be born alive [2].

The underlying rule comes from a hadith of the Prophet ﷺ, who prohibited the sale that involves excessive uncertainty (gharar):

نهى رسول الله ﷺ عن بيع الغرر

“The Messenger of Allah ﷺ prohibited the sale involving gharar.” [3]

Gharar here means a real, serious uncertainty. There is uncertainty about whether the object will come to exist, whether it can be obtained, and whether it can actually be handed over. A sale built on this kind of uncertainty risks one party paying money and receiving nothing in return. The jurists treat this as a hidden form of gambling, and as a wrongful way of consuming another person’s wealth [4].

2. What the Four Schools Agree On, and Where They Differ

Read closely, the four schools of Fiqh do not give four different definitions of Madoom. What differs between them is the legal reasoning that leads each school to the same conclusion. An object that has no present existence, and that carries a real risk of never existing or never being delivered, cannot be validly sold. The details differ. The conclusion does not.

2.1 Hanafi school

In this school, existence is a condition for the contract to form at all. So, a sale of something non-existent is void (batil) from the outset, not merely irregular [5]. Al-Kasani (رحمه الله) gives the examples of future animal offspring and fruit before it appears on the tree. He also draws a careful line between something that truly does not exist yet, and something that already exists but carries a risk of not existing, such as milk that may or may not be present in an udder [6].

2.2 Maliki school

This school frames the problem mainly around the inability to deliver, rather than existence as a separate condition on its own. Ibn Juzayy (رحمه الله) places the classic example here: the offspring of an animal’s future offspring. The reason it cannot be sold is not existence in the abstract. The reason is that nobody can hand over something that has not yet come into being [7].

2.3 Shafi’i school

Here, non-existence is simply one instance of the wider category of impermissible gharar. Al-Nawawi (رحمه الله) lists the non-existent object together with the unknown object, the runaway animal, and anything else that cannot be delivered. The common thread across all of these is uncertainty, not non-existence by itself [8].

 2.4 Hanbali school

The standard position, found in Ibn Qudamah (رحمه الله), extends the same gharar prohibition [9]. But there is a second view within this school, associated with Ibn Taymiyyah (رحمه الله) and Ibn al-Qayyim (رحمه الله). They argue that non-existence, on its own, is not a universal cause of invalidity. No text says that every sale of a non-existent thing is void. The actual prohibition targets gharar. Gharar can attach to something that already exists, like a runaway camel, just as easily as it can attach to something that does not yet exist. On this view, a future object can be sold if it is coming into existence and its delivery are both reliable by normal custom. What remains prohibited is genuine uncertainty about existence, about quantity, or about delivery [10].

Notice what all four positions share, including the more flexible Hanbali view. The entire discussion is about time, and about delivery risk. Madoom describes something that has not yet been brought into being. There is a real question about whether it ever will be. Because of that open question, the seller cannot hand it over today.

3. Does a Crypto Asset Fit This Description?

Take a unit of a crypto asset sitting in a wallet today, for example, 1 bitcoin in a wallet. It was mined years ago. It is not like next year’s fruit, because there is no future event that its existence depends on. It is not like the offspring of an animal’s future offspring either, because there is no chain of future events standing between now and its existence. It is a specific unit that already exists. It is recorded at a specific position on the ledger. It is under the exclusive control of whoever holds the matching private key. It can be transferred right now.

Test this against each school’s own reasoning, rather than against a general feeling that ‘digital’ or ‘virtual’ means ‘not real’.

Under the Hanafi test, the question is whether the object exists at the time of the contract. A crypto asset already recorded on the ledger does exist at that moment. There is nothing left that still needs to come into being.

Under the Maliki test, the question is deliverability. A crypto asset can be transferred as soon as a transaction is signed. There is no structural inability to deliver it, of the kind seen with unshorn wool or an unborn animal.

Under the Shafi’i and standard Hanbali test, the question is gharar over existence, quantity, or delivery. A specific, already-mined unit of bitcoin has none of this uncertainty. Its quantity is fixed and known. Its existence does not depend on some future event. Delivery is not merely possible; it is close to instant.

The mismatch between Madoom and a crypto asset is not a close call that happens to fall in the asset’s favour. It is a mismatch of categories. Madoom is fundamentally about time. It describes something that does not exist yet. A crypto asset that has already been mined or issued, and that is already held and transferable, is not a ‘not yet’. Whatever else still needs to be established about it, non-existence, in the sense this doctrine actually uses the word, is not one of those things.

 4. The Deeper Objection, and Why It Still Misses the Mark

There is a more serious version of this objection, and it is worth taking seriously. It is not really the classical Madoom argument at all. It says something different. Even if the entry is ‘there’ on the ledger, perhaps it is only a symbolic, imaginary, fictional, or illusory existence. Perhaps it is not a real one.

This claim needs to be checked carefully. Classical Fiqh does not actually work with three categories. It does not divide things into real, illusory, and non-existent things. It works with two recognized kinds of existence. There is real, actual existence (wujood haqiqi). And there is existence recognized through a legal ruling (wujood hukmi), which applies even where the physical form of the thing is unusual. Against both of these stands true absence (Madoom). A third, in-between category of ‘symbolic’ or ‘pretend’ existence is not something the classical text provides. Anyone who wants to introduce such a category needs to argue for it from first principles. It cannot simply be assumed by appeal to precedent, because there is no precedent for it [11].

Once the question is framed this way, the objection against ledger entry loses much of its force. A bank balance is also just an entry in a database. Most of the world’s fiat money supply exists only as electronic records, not as physical notes. Shares in listed companies are usually held as electronic entries at a depository, not as paper certificates anymore. None of these are treated as illusory or fictional simply because of how they happen to be recorded.

If ‘it is just a ledger entry’ were enough, by itself, to prove that something does not exist, then bank deposits and electronic money would not exist either. No contemporary scholar, and no fatwa body, actually reaches that conclusion. What a ledger entry really describes is the medium of representation. It tells us how a thing is recorded, and how it is transferred. It does not tell us whether the thing itself is present. These are two different questions. The classical Madoom doctrine was never built to answer the second question by only looking at the first.

 5. What This Shows, and What It Does Not

This part of the series has one narrow job, and it is worth being precise about its limits. Showing that crypto assets are not Madoom does not, by itself, show that they are property (mal). It certainly does not show that they carry financial or economic value (maliyyah), or that they qualify as wealth Shar’iah recognizes (mutaqawwam). Existence is a necessary condition for something to count as mal.

But it is not a sufficient condition on its own. A thing can exist, and still fail to qualify as mal, for entirely different reasons. That question is genuinely still open. It is also more layered than this one, because, unlike Madoom, the schools’ definitions of mal itself do not converge in the same simple way.

What this part does establish is the ground the rest of the series stands on. The debate about crypto assets cannot be closed at the very first step, by simply declaring them non-existent or imaginary. That specific claim, examined on the classical doctrine’s own terms, does not hold up. The next question in this series is harder, and more interesting. It is not whether something is there. It is what kind of thing it is.

Part 2 of this series takes up that question directly: is a crypto asset property (mal) at all? We will start with the view shared by the Maliki, Shafi’i, and Hanbali schools, before turning separately to the more layered Hanafi position in Part 3. In sha Allah!

Part 2: Are Crypto Assets Property (Mal)? The Majority View

Part 1 of this series settled a narrow question. Crypto assets are not non-existent (madoom, معدوم) or imaginary (khayali, خياليّ) in the fiqhi technical sense the jurists use. A unit that has already been mined or issued, that sits at a known position on the ledger, and that can be transferred right now, is simply not the kind of thing that doctrine was built to exclude. But that conclusion led us to a harder question. Existence is necessary for something to be property (mal, مال), but mere existence is not sufficient for something to be mal. Something can exist and still fail to be mal.

This part takes up that question for the majority of the schools of fiqh. The Maliki, Shafi’i, and Hanbali schools, referred to here as the Jumhur, share a broadly similar approach to defining mal. The Hanafi school builds its definition differently, and that difference matters enough that it needs its own part. So this part asks one question. Do crypto assets qualify as mal under the Maliki, Shafi’i, and Hanbali schools’ definitions? Part 3 will then ask the same question under the Hanafi approach.

1. Why Mal Has to Be Settled First

It is worth pausing on why this classification matters at all. Mal is not an abstract label. It is a threshold that a long list of Shar’iah principles and rulings in Fiqh depend on. A sale transaction requires the object of sale to be mal. Zakat is calculated only on mal, subject to further conditions. Inheritance distributes mal itself. Liability for destruction (dhaman, ضمان) arises when someone destroys another person’s mal. Gift (hibah, هبة) transfers mal. Endowment (waqf, وقف) locks mal for a charitable purpose [12]. If something is not mal at all, none of these Shar’iah frameworks even begin to apply to it.

This is also why one distinction needs stating plainly, because the entire series is built on it. There is a difference between saying ‘this thing fails to be mal at all’ and saying ‘this thing is mal, but a specific ruling makes it haram for another reason’. The first claim removes the thing from the law of wealth or property entirely. No sale, no zakat, no inheritance, no liability for destroying it. The second claim keeps the thing inside the law of wealth and then restricts it. The two claims have very different consequences, and they require very different kinds of proof. Much of the confusion in the crypto debate comes from sliding between them.

2. Do the Majority Schools Require Physical Form?

The instinctive objection to crypto assets as mal is that they have no physical body. There is nothing to hold in a physical sense. So the first structural question is whether the majority schools make physical corporeality (ayn, عين) a condition of mal in the first place.

They do not. The established position across the Maliki, Shafi’i, and Hanbali schools is that usufructs (manafi, منافع), meaning the benefits or utility derived from things rather than the things themselves, are property in their own right. A standard formulation describes them as valuable properties, compensable through contracts and through usurpation, just like corporeal objects [13]. This is not a marginal concession. It is how these fiqh schools explain ordinary daily transactions. A tenant who rents a house owns something real for the term of the lease, even though the landlord keeps the walls and the roof. Ibn Qudamah (رحمه الله) states this directly. The tenant owns the usufruct of a house through the lease just as a purchaser owns the object he bought [14].

The same schools also recognize at least financial, transferable rights (huquq, حقوق) as property. The clearest classical examples are easements. A right of passage over land, a right to draw water, a right to drain water, and a right to build upward can each be sold or gifted independently [15]. The schools are careful here. Not every right is mal. Personal permissions, offices, and rights that were legislated for one specific purpose may be neither saleable nor inheritable [16]. But the accurate summary is this. Where a right is lawfully valuable, established, sufficiently defined, and transferable, the majority fiqh schools treat it as property, even though nobody can touch it.

This matters for crypto assets in an obvious way. The objection ‘it has no physical body’ is not an objection these three fiqh schools ever committed themselves to. Their own doctrine prices, protects, inherits, and compensates intangible things. Whether a given crypto asset is best understood as a benefit, or as a standalone right, or as something else, is a classification question this series takes up in the taxonomy part. For now, one point is enough. All these three schools of fiqh accept both benefits and rights as mal. Physical form is not the test.

3. The Majority Definitions of Mal

With that groundwork laid, the definitions themselves can be stated precisely by each school in its own words.

3.1 Maliki school

Several complementary Maliki definitions appear in the sources. Al-Shatibi (رحمه الله) defines mal as:

ما يقع عليه الملك، ويستبد به المالك عن غيره إذا أخذه من وجهه

“That over which ownership falls, and which the owner may hold exclusively against others when he acquires it through a lawful means.” [17]

Ibn al-Arabi (رحمه الله) defines it as:

ما تمتد إليه الأطماع، ويصلح عادة وشرعًا للانتفاع به

“That toward which people’s desires extend, and which is fit, both customarily and legally, to be used beneficially.” [18]

Qadi Abd al-Wahhab (رحمه الله) puts it in terms of custom and compensation:

ما يتمول في العادة ويجوز أخذ العوض عنه

“That which is treated as wealth by custom, and for which compensation may lawfully be taken.” [18]

Line these up and the Maliki elements are clear: recognized customary value, lawful benefit, ownership and the owner’s power to exclude others, and lawful compensability. Physical substance, as such, appears nowhere in the list.

3.2 Shafi’i school

A statement attributed to al-Shafi’i (رحمه الله) himself sets the tone:

لا يقع اسم المال إلا على ما له قيمة يباع بها وتلزم متلفه وإن قلت، وما لا يطرحه الناس

“The name mal applies only to that which has a value for which it is sold, and whose destroyer is liable for that value, even if small, and which people do not simply discard.” [19]

Al-Zarkashi (رحمه الله) gives the more conceptually explicit definition:

المال ما كان منتفعًا به، أي مستعدًا لأن ينتفع به، وهو إما أعيان أو منافع

“Property is that which is beneficial, or prepared to be benefited from, and it is either corporeal objects or usufructs.” [20]

Two things stand out. First, the Shafi’i test runs on benefit, value, and liability for destruction. Second, al-Zarkashi (رحمه الله) writes the intangible category directly into the definition itself. Mal is either objects or usufructs.

3.3 Hanbali school

The standard Hanbali formulation, associated with Ibn Qudamah (رحمه الله) and carried by al-Hajjawi (رحمه الله), is:

ما فيه منفعة مباحة لغير ضرورة

“That which contains a lawfully permitted benefit, not restricted to necessity.” [21]

Al-Buhuti (رحمه الله) gives the related formula:

ما يباح نفعه مطلقًا، أو يباح اقتناؤه بلا حاجة

“That whose benefit is permitted unconditionally, or whose possession is permitted without a special need.” [22]

The word unconditionally is doing careful work here. It excludes things whose only use runs through a forbidden activity, such as wine. It excludes things usable only under necessity, such as carrion for a starving person. The benefit must be ordinarily available, not merely excused in an emergency. Some Hanbali wordings speak of an object of lawful benefit, which can sound like a corporeality requirement. But al-Buhuti (رحمه الله) himself flags the fix. The definition should either say property or an unconditionally lawful usufruct, or define property so that it covers both objects and usufructs [23]. The school’s own practice treats usufructs and debts as property, so the wording is a drafting point, not a doctrine.

3.4 What the definitions share

Set the three definitions side by side and a common core emerges. Something is mal for these schools of fiqh when it has these attributes. It is naturally desired and carries recognized commercial value. It is capable of being owned, with the owner able to exclude others. It can be stored and retained. It is transferable, and compensation may lawfully be taken for it. And its benefit is lawful in Shar’iah. Different schools weigh these elements differently, but the composite picture is stable.

4. Lawful Benefit: Inside the Definition, Not After It

One structural feature of the majority fiqh schools’ approach deserves special attention, because it is the main point of contrast with the Hanafi approach in Part 3. The Jumhur fold the Shar’iah-permissibility of benefit, called lawful benefit (intifa shar’i, انتفاع شرعي), into the definition of mal itself. For these schools, asking ‘is it mal?’ already includes asking ‘is its benefit lawful in Shar’iah?’ The question is not answered in two separate stages.

But lawful benefit is not a loose test. Mere permissibility is not enough. Across the three schools, the benefit must also be real or reasonably prospective, non-trivial, and recognized as valuable by ordinary custom. The classical examples make the point vividly. Renting an apple merely to smell it does not count, because nobody reasonably pays for that [24]. One or two grains of wheat do not count, because the quantity is trivial. An ordinarily useless insect does not count, because custom assigns it no value. On the other hand, an unusual benefit can still count when it is real and recognized. The Shafi’i sources accept leeches for drawing blood and trained animals for hunting. Some Hanbali texts accept selling a songbird for its pleasant voice, because custom treats that enjoyment as a real benefit [25].

So the working test across the majority of fiqh schools comes down to a few questions. Is there a real benefit? Is that benefit permitted by the Shar’iah? Is it ordinarily intended and valued, rather than fanciful or negligible? Is its permissibility ordinary, rather than an emergency dispensation? And finally, has the Shar’iah independently prohibited exchanging the thing despite its usefulness? That last question matters because lawful use and valid sale are not always identical. The famous example is the dog. Several schools permit keeping a dog for hunting or guarding, which is a lawful use, yet still prohibit its sale because of a specific textual (hadith) prohibition [26].

5. Testing Crypto Assets Against the Majority Criteria

Now the criteria can be applied, attribute by attribute, at the level of the asset class in general. No claim is made here about any specific coin or token.

5.1 Ownership and exclusion

The Maliki definitions stress that the owner holds the thing exclusively against others. A crypto asset held through a private key fits this emphasis unusually well. Whoever controls the key controls the asset, and nobody else can move it. It is enforced by the design of the system itself, continuously, against everyone [27].

5.2 Storability

Classical mal can be retained and kept for future use. A crypto asset can be held indefinitely, just like any other digital asset. It does not decay, and holding it requires no ongoing intervention. Wallets holding assets untouched for a decade are a documented, ordinary fact of these networks [28].

5.3 Transferability and compensability

The definitions expect that mal can be transferred, and that compensation may lawfully be taken for it. Crypto assets transfer by a signed transaction, with final settlement typically in minutes. Deep global markets price them continuously [29].

5.4 Natural desire and commercial value

Here the Maliki phrase is exact. Mal is that toward which people’s desires extend, and their custom treats it as wealth. This is a factual question about custom (urf, عرف), and it should be answered with evidence rather than assertion. The evidence is broad on every measure. Regional on-chain volumes for the twelve months ending June 2025 sum to roughly nine trillion US dollars across the major regions, with year-over-year growth in every region, led by Asia-Pacific at 69 percent. The breadth matters as much as the scale. The 2025 Geography of Crypto Report by Chainalysis ranks India first in the world, followed by the United States, Pakistan, Vietnam, and Brazil, with Nigeria, Indonesia, Ukraine, and the Philippines close behind [30].

This is not the custom of one wealthy region. It spans high-income and lower-income countries at the same time. Wallet ownership tells the same story at the level of ordinary people. In Nigeria, 84 percent of surveyed adults report owning a crypto wallet. In South Africa the figure is 66 percent. In Vietnam it is 60 percent, in the Philippines 54 percent, and in India 50 percent [31]. And the motivation in these markets is utility, not trading for its own sake.

Stablecoins are used as payment rails, savings instruments, and remittance tools in economies with weak currencies and expensive banking. In Pakistan and Vietnam, freelancers routinely receive their professional income in crypto assets [32]. When half a country’s adult population holds an asset, and uses it to get paid, to save, and to send money home, a jurist does not need to strain to find urf. This data is cited here for one purpose only. It corroborates, at scale, that custom in fact treats these assets as wealth. The data is evidence of urf. It is not itself an authority on the Shar’iah question.

5.5 Lawful benefit at the level of the class

The general uses of crypto assets are the ordinary uses of wealth. Medium of exchange. Store of value, including as a refuge in economies suffering persistent inflation. Settlement of cross-border obligations at low cost. None of these uses is forbidden in itself. Each is the kind of real, customarily intended, non-trivial benefit the definitions describe. And these uses are no longer informal workarounds at the margins of the law.

Formal legal systems now regulate them expressly. The United States enacted federal legislation for payment stablecoins in 2025. The European Union’s comprehensive crypto-asset regulation became fully operational across its member states at the end of 2024. Japan recognizes fiat-backed stablecoins as electronic payment instruments under its payment law. Singapore regulates digital payment tokens and has launched an initiative for settling transactions with regulated stablecoins. The UAE permits merchants to accept licensed dirham-backed stablecoins. Brazil, Nigeria, South Africa, and Kenya have each brought crypto assets under formal licensing and supervision [33].

One development deserves particular attention for this paper’s question. The United Kingdom has clarified, through legislation, that digital assets are capable of being personal property under English common law [34]. A major legal system examining the same question reached the conclusion that these assets are property. That conclusion does not bind the Shar’iah analysis. But it is striking corroboration that recognizing crypto assets as property is the natural reading of what custom has already done. And notably, nothing in the majority test asks who issued the asset. The definitions run on custom, benefit, ownership, and exchange. They do not run on state or government backing. Custom is doing the work here, and custom is exactly what the classical definitions point to. That so many states now regulate these assets is useful evidence. That none of them created these assets changes nothing in the test.

6. Two Different Ways an Asset Can Go Wrong

A methodological point needs to be stated here, because it will recur throughout this series. When people object to crypto assets on Shar’iah grounds, the objections usually point at two very different kinds of problems, and the difference between them matters.

The first kind is misuse of a neutral asset. Someone gambles with bitcoin. A lending platform pays interest in a stablecoin. These are real Shar’iah violations. But the violation sits in the transaction, not in the asset. The asset’s own value does not come from the gambling or interest. Classical Fiqh already handles this case cleanly. Gold or silver can be used to pay a bribe, yet nobody concludes that gold and silver are therefore not mal. Prohibition attaches to the particular exchange and the particular use. The general category is assessed on its general attributes. Misuse, however widespread, does not travel backward to strip an entire asset class of its status as property.

The second kind is different, and it deserves to be named here. Some tokens do not merely get used wrongly. They are built on a haram source of value. A token that directly and solely represents wine, or pork, or a share of a casino’s revenue is not a neutral coin or token. The impermissible element is what the token is, not what someone does with it. For assets like these, the question is not misuse at all. The question is whether they qualify as mal in the first place, because the majority definitions, as Section 4 showed, build lawful nature and benefit into the definition itself.

This paper will not resolve that second question here, and the reason is structural.

The two great definitional frameworks of Jumhur and Hanafis place the lawfulness (haram and halal) filter at different points in the discussion of mal. The majority schools place it inside the definition of mal. The Hanafi school, as Part 3 will show, places it downstream, in a separate classification that divides mal into what the law protects and permits to be exchanged (mutaqawwam, متقوم) and what it does not (ghayr mutaqawwam, غيرمتقوم).

We will demonstrate the criteria for judging haram-source assets once, comparatively, after both frameworks are on the table. Doing it now would mean writing half the analysis now, and then reopening it later. A later part of this series takes it up in full. Here it is enough to fix the distinction itself. Misuse never contaminates the category. The constitution of a coin/token is a different question, and it is coming.

 7. What This Shows, and What It Does Not

The conclusion of this part is deliberately limited, and it is worth stating its exact shape. Measured against the majority schools’ own definitions, nothing in the technical nature of crypto assets excludes them from mal. Their digital form, their intangibility, and their existence as ledger entries test against a corporeality condition the majority schools never imposed. And at the level of the asset class, the general attributes are satisfied. These assets are owned exclusively, stored, transferred, exchanged for compensation, desired by custom at documented scale, and put to general uses that are lawful in themselves.

What this part does not show is just as important. First, mal-status under the majority test does not establish monetary status (thamaniyyah, ثمنية). That is a separate question with its own criteria, we will deal with it later. Second, because the majority definitions include lawful (halal) benefit inside the definition itself, a complete verdict on any specific token requires examining the source of that token’s value.

A token built on a haram source raises a definitional question; this part has deliberately deferred it, for the reason given in Section 6. So the finding here is precise. The door of mal is open to crypto assets as a category. Whether a particular token passes through it depends on an analysis that comes later in the series. Third, nothing here touches the Hanafi framework, where the definition of mal is built differently, and where a second classification, mutaqawwam and ghayr mutaqawwam, does separate work. And fourth, no ruling is given on any specific coin, token, or platform yet. Those determinations require asset-by-asset analysis, which this series defers deliberately.

The Hanafi question comes next, and it deserves its own part for a reason. The Hanafi school does not fold lawful benefit into the definition of mal. It separates the question of what counts as wealth from the question of what wealth the law protects and permits to be exchanged. That separation changes the shape of the whole analysis, and without it, the haram-source question flagged above cannot be answered properly for either framework. Part 3 takes it up directly.

Note: This series of articles first appeared as a series of posts on LinkedIn. It is published with permission for wider dissemination. Author can be reached at: https://www.linkedin.com/in/drfarrukhhabib/

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