Dr. Farrukh Habib

Founder & CEO, Azka Advisors (UK)

Co-Founder of Alif Technologies (Dubai)

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

Part 2 of this series asked whether crypto assets are property (mal) under the Maliki, Shafi’i, and Hanbali schools. The answer, at the level of the asset class, was yes. But that left one question open: whether specific crypto assets are actually lawful in Shari’ah. That question was deferred, and this series takes it up later, alongside the Hanafi school’s own version of the same question. This part asks whether crypto assets are mal under the Hanafi school, and it needs a part of its own, because the Hanafi school does not approach the question the same way.

The Jumhur, the three schools covered in Part 2, fold lawful benefit into the definition of mal itself. So, for them, mal is something that is already lawful. Anything unlawful is not mal. The Hanafi school has more basic criteria for mal, and then it splits mal into lawful and unlawful. Meaning, first it asks whether something is mal at all, without yet asking whether it is lawful or unlawful. Mal that is lawful in Hanafi fiqh is called mal mutaqawwam: wealth the law protects and permits to be exchanged.

In Hanafi school, saying something is not mal at all is different from saying, it is mal but unlawful. The first claim removes the thing from the law of wealth completely. The second keeps it inside that law and then restricts it. This part deals only with the first question, whether a crypto asset is mal at all. The second question, whether it is also lawful or not, is addressed in the later articles of this series.

1. Stage One: Mal as the Broader Genus

The Hanafi jurists never settled on one single definition of mal. Several definitions recur in different books. Although their wording differs, they describe the same picture. The most quoted version is transmitted by Ibn Nujaym (الله رحمه) and Ibn Abidin (الله رحمه):

“Mal is that toward which human nature inclines, and which can be retained for a time of need.” [1]

The Ottoman Majalla codifies the same idea in Article 126:

“Mal is that toward which human nature inclines, and which can be retained until a time of need, whether movable or immovable.” [2]

Other Hanafi authorities, such as al-Sarakhsi (الله رحمه), al-Taftazani (الله رحمه), and the author of al-Hawi al-Qudsi, describe the same idea in slightly different words. [3] These are not competing definitions. They are the same definitions seen from different angles.The al-mal and al-milk distinction

1.1 The al-mal and al-milk distinction

Before listing the elements of mal, one distinction needs to be made clear, because the rest of this part depends on it. Hanafi doctrine treats mal as narrower than a broader concept called al-milk, meaning ownership, or a legally protected proprietary interest. Article 125 of the Majalla defines al-milk broadly:

“Al-milk is whatever a person owns, whether corporeal objects or usufructs.” [4]

The concept of mal is narrower than al-milk. Ibn Abidin (الله رحمه) states the distinction directly:

“The correct position is that a usufruct is al-milk but not mal. Al-milk is whatever a person may exclusively dispose of, while mal is whatever can be retained so that benefit may be taken from it at a time of need.” [5]

So, a usufruct can be al-milk, something a person owns and controls, without ever becoming mal, because it does not last long enough to be retained. It exists and is consumed in the same movement. This is why the Hanafi default position treats usufructs and mere rights as falling outside mal. It is also why the Hanafi jurists still had to make specific exceptions, which the next section covers.

1.2 The elements of mal

Taken together, these definitions point to five elements.

• It must be an ayn: a physical object, not a benefit that exists only intangibly. Some Hanafi jurists put this directly, describing mal as “a physical object over which people compete and which is exchanged for consideration.” [6]
• It must be capable of being captured (Ihraz): exclusive possession, or effective control. Actual possession is not required. What matters is whether the thing can be captured or controlled at all.
• It must be capable of being retained or stored, meaning it can be preserved instead of vanishing the instant it comes into being.
• It must serve a real, meaningful human interest, not a fanciful or negligible one. A single grain of wheat or a drop of water is not mal on its own, since nobody preserves, competes for, or pays for that very small amount.
• People must actually treat it as wealth. This is the decisive, objective test. Ibn Abidin (الله رحمه) states it in a line that recurs throughout this series: “The quality of being mal is established when all people, or some of them, treat the thing as wealth or property.” [7] Universal agreement is not needed. If a recognized group of people treats something as mal, that is enough.

1.3 Ihraz: Ability to Capture, not tangibility

The ihraz element deserves a closer look, because the crypto argument later depends on it. The classical Hanafi scholars mention that air, gas, sunlight, and moonlight are excluded from mal, not because they lack physical existence, but because nobody can bring them under exclusive control. The exclusion is about capturability, not physical form. Once something can be separately captured and controlled, that exclusion no longer applies. For example, compressed air or gas held in a container satisfies ihraz in a way open air never can, even though nothing about the air itself has changed [8]. What changed is control, not the substance.

2. Stage Two: Permissibility (Taqawwum)

Something being mal is not the end of the analysis. The Hanafi school adds a second stage, called taqawwum (permissibility), which asks whether that mal is also mal mutaqawwam: asset the Shari’ah allows to benefit from and permits to be exchanged. Ibn Abidin (الله رحمه) states the relationship between the two stages precisely, using wine as the example:

“Mal is broader than mutaqawwam. Mal is that which can be retained even if it is not lawfully permitted, such as wine. Mutaqawwam is that which can be retained together with lawful permissibility.” [9]

So, wine is mal in Hanafi school. It exists physically, and people treat it as wealth, retain it, and exchange it. But it is not mutaqawwam, because the Shari’ah does not permit deriving benefit from it. The Hanafi structure keeps these two findings separate instead of merging them into one.

This part does not attempt a full taqawwum analysis for crypto assets, for the same reason Part 2 deferred its own equivalent question. Lawful benefit has to be judged asset by asset, not for the whole class at once, and that analysis belongs later in this series, once the Hanafi and Jumhur approaches can be compared side by side.

3. The Restriction, and How It Actually Bends

A usufruct is al-milk but not mal, and an abstract right is not a physical object capable of being captured or controlled either. Because of this, the Hanafi default position does not consider them mal. Ibn Abidin (الله رحمه) states the default rule and its exceptions in a single passage:

“Compensation may not be taken for abstract rights detached from ownership. Such rights do not admit of transfer of ownership, and settlement for them is not valid. Destroying an abstract right does not create liability, because compensation for an abstract right is void, unless it extinguishes a confirmed right, in which case it is treated like the destruction of actual ownership for purposes of liability. Excluded from this are the right of retaliation, the marital tie, and the right of servitude, for compensation may be taken for these.” [10]

This passage does two things at once. It states the restriction, and it also mentions exceptions to it, and the exceptions matter more for this series. The essential definition of mal never changes. A mere right does not turn into a physical, retainable object just because an exception applies to it. What changes is the Islamic legal treatment. Hanafi jurists identified specific ways a right or benefit can receive the ruling of mal without becoming mal in its essential nature. Three such ways are relevant here.

3.1 Way #1: subordination to a tangible asset

The clearest way is subordination to a physical object that is already mal. The classic example is the right of passage, haqq al-murur, the right to use a specific road or path. Al-Muhit al-Burhani explains why it counts as mal: “The right of passage was given the ruling of maliyyah by way of subordination, so it may be exchanged for part of the price.” [11] Fath al-Qadir gives the reasoning in one line: “The right of passage is a right attached to the corpus of the land, and the land is mal, being a physical object. Whatever is attached to it takes the ruling of that object.” [12]

The right to draw water, haqq al-shirb, works similarly but with a twist. It is normally sold only as an attachment to land, but Fath al-Qadir records one narration where it can be sold on its own: “This differs from the water-right, whose sale is valid as subordinate to the land by unanimous narrations, and independently according to one narration, which is the position adopted by the jurists of Balkh, because it represents an actual share of water, and for this reason it creates liability if destroyed.” [13] The water-right can stand alone here because it resolves to a specific, measurable share of a physical substance (water). The closer a ‘right’ sits to something physical and identifiable, the more easily Hanafi doctrine treats it as mal.

3.2 Way #2: a valid contract

The second way is the lease contract, ijarah. A usufruct is not mal by itself, but once it becomes the object of a valid lease, it is treated as mal for the purposes of that contract. Al-Sarakhsi (الله رحمه) explains this: “Whatever is valid as a counter-value in a sale is also valid in a lease, because usufructs carry the ruling of wealth, or the contract itself establishes for them the ruling of maliyyah.” [14] The usufruct itself does not become a physical object. The contract simply treats it as one, because the Islamic law recognizes a real and constant human need for leasing the usufruct without the physical object.

3.3 Way #3: Urf-recognized financial value

The third way is custom. The exceptions named earlier, the right of retaliation, the marital tie, and the right of servitude, are not attached to a physical object and are not leased. They are compensable because each is what Hanafi jurists call an original entitlement, a right that exists in its own right rather than merely to prevent harm. Ibn Abidin (الله رحمه) makes the same point about the right to a religious or endowed post, haqq al-wazifah: “It is not hidden that the holder of a post has that right established for him by the judge’s confirmation, as an original entitlement, not as a means of removing harm from him. Attaching it to the right of a service-bequest, and to the right of retaliation and what follows it, is therefore more fitting.” [15]

Custom also works through registration and ordinary commercial dealing. A trade name or trademark, once officially registered, becomes valuable in the custom of traders and is treated in circulation the way tangible property is treated, subject to two conditions: the name must be lawfully registered, since an unregistered name does not count as mal in traders’ custom, and the sale must not involve deception against consumers [16].

What unites all three ways is a single method. A right or benefit does not become mal in its essential nature. It receives the ruling of mal through subordination, through contract, or through custom. This is one consistent approach running through the Hanafi school, not three unrelated exceptions.

4. The Contemporary Urf-Based Extension

The classical ways were built around rights of way, leases, and named legal entitlements. Modern Hanafi fatwa literature extended the same reasoning to assets the earlier jurists never had occasion to consider. Two of these are related directly to crypto assets: electricity and copyright.

4.1 Electricity

Electricity is not a physical object in the classical sense. It cannot be seen or held the way grain or cloth can. Contemporary Hanafi fatwas still treat its sale as valid, on the same capture-and-control logic described above. Fatawa Haqqania puts it directly:

“Since it is not necessary for the object of sale to be an ayn (physical object), if something is not a physical object but is customarily considered mal, its sale is valid. Electricity, although not a physical object, may therefore be validly bought and sold, because things of this kind fall within maliyyah.” [17]

Ashraf Ali Thanawi (الله رحمه) reaches the same conclusion earlier, with an analogy that fits this part’s argument closely:

“It is not hidden that electricity and air are things people desire. Each of them, once one has power over it and takes possession of it, is mal, like water in a waterskin.” [18]

Mufti Taqi Usmani (دامت بركاتهم العالية) affirms the same ruling in Fiqh al-Buyu, where he cites Sheikh Thanawi’s (الله رحمه) position directly. [19]

Water is not mal while it runs freely in a river, for the same reason open air is not mal. Once it is held in a waterskin or a container, it becomes mal. Electricity follows the same pattern. It is not mal as an unharnessed physical phenomenon, but it becomes mal once captured, metered, and delivered under someone’s control.

4.2 Copyright

Copyright is a cleaner precedent for a purely intangible asset, since it involves no physical medium at all, not even captured air or metered electricity. Fatawa Haqqania draws a distinction between two kinds of mere rights:

“The right of authorship, though it belongs to the category of mere rights, and mere rights are themselves of two kinds. One kind has a financial benefit attached to it, such as the right to a post. The other kind has no financial benefit attached, such as the right of pre-emption. Islamic law permits taking compensation for relinquishing rights of the first kind. Since the right of authorship now has a financial benefit attached to it in the present age, its sale and purchase are valid. In fiqhi terminology this is called the right of precedence, haqq al-asbaqiyyah.” [20]

The same source extends this logic further, treating the classical ways as one expanding principle rather than three separate, closed categories:

“It should be valid to take compensation for the right to build upward, the water-right, and the drainage-right, just as relinquishing a post and similar rights has been permitted.” [21]

Trade licenses and business goodwill follow the same custom-based reasoning. Fatawa Dar al-Uloom Zakariyya states plainly that selling a trade license is an established market practice, and that traders’ custom treats it the way it treats mal, so it carries the ruling of mal. [22]

Mufti Taqi Usmani (دامت بركاتهم العالية) also holds the same position of permissibility of trade of trademarks, tradenames, trade licenses, and copyrights with the same conditions. [23] In fact, he has outlined a framework of five conditions on the basis of which the sale of any abstract rights, not limited to the ones previously mentioned, is allowed. The five conditions are:

• The right must be established in the present, rather than merely anticipated in the future.
• The right must belong to its holder as an original entitlement, rather than existing only to ward off harm.
• The right must be capable of passing from one person to another.
• The right must be precisely defined and free of excessive uncertainty (gharar) or ignorance (jahalah).
• The traders customarily deal with it, in its circulation, the way they deal with tangible property and wealth. [24]

These five conditions are not a new doctrine. They summarize, as a simple checklist, what the examples above already show case by case.

5. Testing Crypto Assets Against the Full Hanafi Structure

Crypto assets are not one uniform thing, and the two ways described above do not apply to every crypto asset in the same manner. Depending on what kind of asset it is, a crypto asset can take the ruling of mal through one of these two ways.

5.1 The way of subordination and capture

Some crypto assets exist as an independent, self-contained unit. They do not represent a claim against an issuer or a counterparty; the unit itself is the thing being held. For assets like this, the relevant question is not whether they are a physical object in the way grain or cloth is, since that is not the actual test. The real test is capturability, and an asset of this kind can be fully captured as an intangible thing can be. It sits at a specific, identifiable position on a ledger, and whoever holds the private key controls it exclusively and continuously, arguably more tightly than a person controls water in a water-skin. This is the same logic that makes captured electricity mal: not a physical object, but something that becomes a controlled, retainable asset once brought under exclusive human control. An asset of this kind satisfies capture on the same basis electricity does, and satisfies retention the same way Part 2 documented, describing wallets left untouched for years at a time.

5.2 The way of urf-recognition

Other crypto assets work differently. Rather than standing as a self-contained unit, they represent a right or an entitlement against a specific protocol, counterparty, or a reserve, closer in kind to copyright or a trade license than to a captured physical thing. For crypto assets like this, the relevant test is the five conditions already given.

1. Is it established in the present, rather than merely anticipated? A confirmed balance or a specific allocation of a crypto asset unit recorded on a ledger exists now. It is not a hope that something may be issued later.
2. Is it an original entitlement, rather than merely protective? The holder’s power to retain, transfer, or dispose of such crypto asset is a positive power, not a defensive one that exists only to prevent harm.
3. Is it transferable? A signed transaction moves control of such crypto asset from one party to another, which is exactly what this condition asks for.
4. Is it precisely defined, free of excessive uncertainty (gharar) and ignorance (jahalah)? The ledger records an exact quantity at an exact position, a higher degree of definition than many of the classical rights this test was built to judge.
5. Do the traders customarily treat it the way they treat tangible property? Part 2 documented adoption at national scale, widespread wallet ownership, and use as a payment rail and a store of value across several economies.

An asset of this kind can clear all five conditions. This way, separately from the first, also places crypto assets within mal.

Which of these two ways applies to a given crypto asset depends on what that asset actually is. We will settle that question for each type of asset in the taxonomy part of this series, not this one. What this part establishes is simply: under one of these two ways, a crypto asset can be considered mal under the Hanafi structure.

6. Scope Limits and What Comes Next

Crypto assets, in general, pass the first Hanafi stage. They are mal. That finding does not by itself make them permissible asset (mal mutaqawwam), since taqawwum is a separate stage with its own test, addressed here only in outline and deferred in full to a later part, for the same reasons Part 2 deferred the equivalent question under the Jumhur framework. It does not resolve the status of any specific coin, token, or platform, since that requires asset-by-asset analysis this series defers deliberately. This article shows that the Jumhur and Hanafi frameworks reach the same first-stage conclusion, that crypto assets in general are mal, but they reach it by different routes. And all these schools of fiqh place the lawful-benefit question at different points in the analysis. In the next article (Part 4), we will compare those two routes side by side, and show exactly where they align and where they diverge.

Sources

[1] al-Bahr al-Raiq Sharh Kanz al-Daqaiq, vol. 5, p. 277; Hashiyat Ibn Abidin (Radd al-Muhtar), Halabi ed., vol. 4, p. 501.

[2] Durar al-Hukkam fi Sharh Majallat al-Ahkam, vol. 1, p. 115 (Majalla, Article 126).

[3] al-Mabsut lil-Sarakhsi, vol. 11, p. 79; al-Talwih ala al-Tawdih, vol. 1, p. 421; al-Bahr al-Raiq, vol. 5, p. 277.

[4] Durar al-Hukkam fi Sharh Majallat al-Ahkam, vol. 1, p. 115 (Majalla, Article 125).

[5] Hashiyat Ibn Abidin (Radd al-Muhtar), Kitab al-Bay, Inaqad al-Bay.

[6] Sharh al-Wiqaya, vol. 4, p. 30.

[7] Hashiyat Ibn Abidin (Radd al-Muhtar), vol. 4, p. 501.

[8] al-Fiqh al-Islami wa Adillatuhu li-Zuhayli, vol. 4, p. 2875.

[9] Hashiyat Ibn Abidin (Radd al-Muhtar), vol. 4, p. 501.

[10] Hashiyat Ibn Abidin (Radd al-Muhtar), Kitab al-Bay, Inaqad al-Bay.

[11] al-Muhit al-Burhani, vol. 7, p. 150.

[12] Fath al-Qadir, Kamal ibn al-Humam, Halabi ed., vol. 6, p. 430.

[13] Fath al-Qadir, vol. 6, p. 428.

[14] al-Mabsut lil-Sarakhsi, vol. 12, p. 163.

[15] Hashiyat Ibn Abidin (Radd al-Muhtar), Kitab al-Bay, Inaqad al-Bay.

[16] Majallat Majma al-Fiqh al-Islami, vol. 5, p. 1946–1947; Fiqh al-Buyu, Mufti Muhammad Taqi Usmani, vol. 1, p. 278 (Maktaba Ma’arif al-Qur’an, Karachi, 2015).

[17] Fatawa Haqqania, vol. 6. Nowshera: Jamia Dar al-Ulum Haqqania, p. 109.

[18] Ashraf Ali Thanawi, Imdad al-Fatawa, vol. 8. Karachi: Maktaba Dar al-Ulum Karachi, p. 93.

[19] Fiqh al-Buyu, Mufti Muhammad Taqi Usmani, vol. 1, p. 26–27 (Maktaba Ma’arif al-Qur’an, Karachi, 2015).

[20] Fatawa Haqqania, vol. 6, p. 113.

[21] Fatawa Haqqania, vol. 6, p. 114.

[22] Mufti Riza-ul-Haq Radelvi, Fatawa Dar al-Ulum Zakariyya, vol. 5. Lenasia, South Africa: Dar al-Ifta Dar al-Ulum Zakariyya, p. 322–323.

[23] Fiqh al-Buyu, Mufti Muhammad Taqi Usmani, vol. 1, p. 278, 281, 284, 285, (Maktaba Ma’arif al-Qur’an, Karachi, 2015).

[24] Majallat Majma al-Fiqh al-Islami, vol. 5, p. 1935.