Question (a)

What is the fatwa of the Saudi scholars on crypto?

Question (b)

Can money be withdrawn from crypto?

Regarding cryptocurrency (such as Bitcoin etc.), the position of the senior scholars of Saudi Arabia, the muftis and the reliable scholarly and fatwa committees is based on the following evidences and fiqh principles:

According to the majority of the senior scholars of Saudi Arabia (among whom are members of the Council of Senior Scholars, Shaykh Abdullah al-Mani', Shaykh Sa'd al-Shathri and other reliable researchers), in the present situation investing in cryptocurrency, buying and selling it, and mining it is not permissible in Shariah.

The scholars have stated the following basic evidences and causes for its prohibition and impermissibility:

1. Gharar and gross ignorance (severe risk and anonymity): It is a principle of Islamic Shariah that trade in any such thing is prohibited whose reality, profit and loss, or existence involves severe ambiguity and risk (which is called gharar). The prices of cryptocurrency rise and fall within seconds merely on the basis of hypothetical demand and supply instead of any real asset or economy. Furthermore, the founders and the hidden movers behind many digital currencies are anonymous, which falls under the category of "gross ignorance" in Shariah.

2. Absence of state patronage and legal guarantee: According to the established principles of economics and Islamic fiqh, the status of currency (zar) can be given only to that thing behind which there is the guarantee and patronage of a country's government, state or central bank, so that people's wealth is protected from being wasted and peace and stability remain in society. No country or central bank is a guarantor of crypto, therefore it does not attain the status of authentic "property" or "currency" in Shariah.

3. Resemblance to gambling (qimar) and consuming wealth in falsehood: The purpose of most investment taking place in the crypto market is not any real manufacturing, trade or service benefit, but merely an attempt to become rich overnight through market speculation and conjecture. In the view of the scholars, this method resembles gambling (lottery), where one person's benefit is another's outright loss, and this is a violation of the Qur'an's verse "Do not consume your wealth among yourselves in falsehood" [Surah al-Baqarah: 188].

4. Cause of economic harms and loss: It is a principle of Shariah that "Do not bear harm yourself and do not harm others" (this principle is derived from the Prophetic hadith «لَا ضَرَرَ وَلَا ضِرَارَ» — Sunan Ibn Majah: 2341, Shaykh al-Albani declared it sahih). Because the crypto blockchain network is anonymous, it is often used at the international level for money laundering, payment of ransom for kidnapping, smuggling and other illegal activities. Becoming part of the venture of such a thing which harms the national and global economy is prohibited in Shariah.

Summary: The agreed trend of the senior people of knowledge of Saudi Arabia is exactly this: until cryptocurrencies obtain an organised state law, an international agreement and the guarantee of central banks, and until the severe economic risk (gharar) found within them ends, till then its business and investing money in it is not permissible for Muslims, and staying away from it for the protection of one's wealth is obligatory.

If a person has already invested in cryptocurrency and now, after learning the Shariah ruling, wants to withdraw his money from there, then according to the principles of the people of knowledge and the hadith scholars, its Shariah ruling is as follows:

Withdrawing one's principal amount from crypto (which you yourself invested from your own pocket) is completely permissible, rather necessary in Shariah, so that a person immediately separates himself from a trade which the senior scholars have declared disliked or impermissible.

Qur'anic evidence: Allah Almighty's principle is:

﴿وَإِنْ تُبْتُمْ فَلَكُمْ رُؤُوسُ أَمْوَالِكُمْ﴾ (And if you repent, then for you is your principal wealth.) [Surah al-Baqarah: 279]

If, at the time of withdrawing the money, you are also receiving some profit on the principal amount, then its ruling is as follows:

Since this profit has come from a source which has not been recognised as permissible under reliable fiqh principles, therefore using this profit for one's personal use should be avoided as much as possible.

The demand of caution and taqwa is that you keep your principal amount with you and give the additional profit that has been obtained, without the intention of reward, to a poor person, a needy person or a welfare work, with the intention of purifying the wealth, so that you may be cleansed of this doubtful wealth.

If, because the market has fallen, your amount has become less than the principal capital, then whatever capital remains should be withdrawn immediately, so that you can be saved from further financial loss and from the sin of remaining involved in this non-Shariah transaction.

Summary: Withdrawing one's money from crypto is not only permissible, but protecting one's capital from this doubtful market and investing it in a halal and real economic business is exactly what the religion seeks and intends.

Translated from the original Urdu fatwa.