A comparative analysis of cryptocurrencies and Shariah-compliant money with reference to custom (‘Urf): an analytical jurisprudential study

This study seeks to examine the legal ruling on cryptocurrencies by grounding them within the classical Islamic conception of money. While the majority of Maliki, Shafi’i, and Hanbali jurists restricted the definition of money to that which possesses intrinsic (natural) value, some Hanafi scholars, along with a narration from Imam Malik and an opinion attributed to Imam Ahmad, extended the definition to include that which is established by customary usage. Employing inductive, analytical, and comparative methodologies, the study explores traditional jurisprudential texts alongside the core functions of money and its historical development, culminating in the emergence of virtual currencies such as Bitcoin. This has raised the question of whether such currencies can be deemed valid money through prevailing custom. Scholarly opinions diverge between permissibility, prohibition, and hesitation; however, the study supports the view that conditional permissibility is most appropriate—provided that such currencies are regulated by clear Shariah and legal standards. Since money derives its legitimacy from custom, anything widely accepted as a medium of exchange and a measure of value qualifies as money. Despite concerns over the lack of governmental oversight and potential misuse, such as in money laundering, the study argues that with proper regulatory frameworks, the use of cryptocurrencies is permissible, as they represent a digital evolution of monetary instruments. Accordingly, the study recommends the establishment of clear legal and Shariah-based regulations to safeguard transaction integrity and protect the interests of all parties involved