Fatwa No : 85553
Ruling on Trading in Forex and Cryptocurrency

Ruling on Trading in Forex and Cryptocurrency

Assalamu Alaikum wa Rahmatullahi wa Barakatuh
I have an issue and request Shariah guidance regarding it. Nowadays people invest and engage in buying and selling in Forex Trading and Cryptocurrency.
My questions are:
1. Is Forex trading permissible or impermissible according to Shariah?
2. Is trading in cryptocurrencies such as Bitcoin, Ethereum, etc., allowed?
3. If there are certain conditions under which it is permitted or prohibited, kindly explain them.
May Allah reward you with goodness.

الجوابُ حامِدا ًو مُصلیِّا ً

Forex trading is not permissible in Shariah, because—according to the method known to us—a person cannot directly purchase anything in this market. Instead, he opens an account with a company by depositing an amount, for example, one thousand dollars, and through that account he enters the market. These companies, along with other facilities, also provide a large guaranteed amount (leverage). On the internet, the prices of different commodities keep appearing and fluctuate every moment. The trader conducts a transaction using the amount provided by the company, and after the price rises, he sells it to earn profit. If the price falls, it is considered his loss. The company charges its fixed commission on each completed trade, and if the trade is not closed within the specified time, the company charges additional fees. The buying and selling in this entire process is only paperwork—there is no actual possession of the purchased items, nor is possession intended. Rather, it is merely a settlement of profit and loss. Therefore, this is a form of speculation (satta) and hence haram.
Moreover, taking commission on the amount provided by the company is either interest on a loan or a fee for guaranteeing (kafalah), and both are impermissible in Shariah. Therefore, engaging in this business and earning profit from it is not permissible, and one must refrain from it.
As for current digital currencies, their Shariah status is still unclear and unsatisfactory. In Pakistan and many other countries, they have not been legally recognized as a medium of exchange or for buying and selling. Therefore, based on the information available so far, buying, selling, trading, or using the profit derived from digital currencies requires precaution.

مأخَذُ الفَتوی

کما فی بدائع الصنائع: وأما الذي يرجع إلى المعقود عليه فأنواع (منها): أن يكون موجودا فلا ينعقد بيع المعدوم، وماله خطر العدم كبيع نتاج النتاج بأن قال: بعت ولد ولد هذه الناقة وكذا بيع الحمل؛ لأنه إن باع الولد فهو بيع المعدوم، وإن باع الحمل فله خطر المعدوم الخ (فصل في الشرط الذي يرجع إلى المعقود عليه ج:5، ص: 138،ناشر: دار الکتب العلمیۃ)۔