Prof. Dr. Zahid Mughal

Professor, NUST University

Several friends have asked for the opinion on Mufti Taqi Usmani’s fatwa regarding cryptocurrencies. Any meaningful analysis of a legal opinion depends upon identifying the underlying rationale (manāṭ) on which it rests and understanding how that rationale fits within the author’s broader legal and intellectual framework.

In the present fatwa, Mufti Taqi’s principal reason for ruling against cryptocurrencies is that they do not qualify as māl (property/wealth). The argument offered is that cryptocurrencies are nothing more than fictitious numbers recorded in ledgers rather than real things.

This note does not seek to examine the various juristic definitions of māl. Rather, it argues that merely describing cryptocurrencies as digital numbers or ledger entries does not seem sufficient to exclude them from the category of māl. The same description applies to modern banking, electronic money, and numerous forms of intangible financial rights. In fact, what we call fiat currencies—such as the Pakistani Rupee or the US Dollar—have themselves largely become ledger entries. The balances held in bank accounts (including those of Islamic banks) are, in reality, digital records.

Nevertheless, these currencies are treated as assets either in their own right or by way of fulūs, and Mufti Taqi himself accepts this characterization (indeed, he also permits salam transactions in currencies).

Likewise, modern carbon credits are essentially transferable entries recorded in electronic registries. Their economic value ultimately derives from human welfare and the avoidance of environmental harm. These rights possess no physical corporeality of their own. If ‘being intangible’ and ‘registry-based numbers’ were sufficient to deny something the status of māl, then the proprietary status of carbon credits and similar modern financial rights would also become questionable. Accordingly, the fact that cryptocurrencies consist of digital entries cannot, by itself, establish that they are not māl.

Excluding cryptocurrencies from the category of māl, thus, appears to require establishing at least one of the following propositions:

First, it must be established that only a real thing can qualify as māl, and that cryptocurrencies are not real things but merely fictitious or imaginary entities. However, this position requires defining what exactly constitutes a ‘real thing’. If reality is restricted to substances or physical bodies, then the proprietary status of numerous intangible rights, software licences, and similar assets becomes problematic, despite their widely recognized economic value. Today, digital assets within virtual games—such as virtual land, weapons, skins, or powers—are bought and sold for money.

They possess no physical existence, yet they are characterized by exclusivity, ownership, markets, and prices. Indeed, one may also question whether ‘real’ should simply be equated with ‘body’. In classical kalām, an accident (ʿaraḍ) is itself a real existent, even though it does not subsist independently but inheres in a substance. Likewise, legal attributions relating to substances and accidents cannot simply be dismissed as devoid of significance. The economic value of nearly all intangible rights ultimately rests upon standardized legal attributions grounded in genuine human benefits (which are themselves particular accidents), and these attributions are treated as exclusive transferable entitlements. It is, therefore, difficult to regard physicality alone as the criterion of reality and, consequently, of māl.

Second, one might argue that māl must consist of a claim against some person or institution, whereas cryptocurrencies are liabilities of no central issuer. However, this condition is not generally required for property. External objects such as land, gold, and other tangible assets are not claims against anyone; rather, they are independent forms of property in themselves. Accordingly, if cryptocurrencies are understood as independent digital assets—analogous, for example, to software—rather than claims against an issuer, this objection would lose much of its force.

Third, it may be argued that cryptocurrencies are associated with no genuine human benefit, and that their value rests entirely upon speculation and gambling, in which case they cannot properly be regarded as assets. However, if cryptocurrencies are shown to provide genuine, enduring, and objectively significant human benefits—such as value transfer, censorship resistance, borderless settlement, settlement without a personal intermediary, or decentralized ownership—then denying them the status of māl merely because they are intangible or digital becomes considerably more difficult.

In such a case, the underlying legal attribution would rest upon an objective foundation rather than a purely fictitious construct. Someone might object that these alleged benefits are not worthy of consideration. But this raises a further question: are these benefits, according to commercial custom or law, the kind of human interests upon which proprietary rights may legitimately be founded, or which reasonable people actually treat as the basis of valuable rights? To deny this merely on personal preference would be analogous to dismissing the importance of, say, copyrights simply because one does not personally value them.

Apart from the above consideration, if the discussion about Cryptos shifts to issues such as:

• the presence of excessive uncertainty (gharar) or gambling (qimār);
• instability in their price formation;
• inadequate protection of people’s wealth;
• public harm arising from their use, or from use beyond a certain scale;
• or conflict with the rulings of the courts or the lawful directives of the governing authority;

These objections may well possess independent significance and, in the view of some scholars, may justify prohibiting cryptocurrency transactions. However, they do not negate the status of cryptocurrencies as māl, because they concern the ‘legal rulings about property’ rather than the ‘essence or nature of property’ itself. Likewise, the question whether something qualifies as māl is distinct from the question whether it qualifies as currency.

In short, the present fatwa seeks to exclude cryptocurrencies from the category of māl on grounds that, within Mufti Taqi Usmani’s own broader legal framework, appears weak and vulnerable.

And Allah knows best.