Halal Crypto List: Which Coins Are Shariah-Compliant?

Halal crypto – Investing in a halal cryptocurrency can be a sound way to put your money to work and potentially grow it. Some cryptocurrencies are considered haram in Islam, so any Muslim who wants to invest in crypto assets and make a return should stick to halal cryptocurrencies that follow Islamic principles. This guide covers everything you need to know about Shariah-compliant cryptocurrencies.

Bitcoin (BTC)

What is Bitcoin?

Bitcoin is a virtual currency that is not controlled by any state or central bank. It was created in 2008 by the anonymous Satoshi Nakamoto. BTC is considered a halal cryptocurrency because it is free of riba (interest) and follows the principle of maslaha (public benefit).

To go further, also read our guides “Investing in Algorand” and “BinaryX Review”.

Advantages of Bitcoin

This halal cryptocurrency makes exchanges easier, both in the physical world and online
Bitcoin is not owned by any country, so it is shielded from political influence
This halal crypto asset helps keep money secure thanks to the cryptographic rules it follows, which protect it from cyberattacks
Unlike fiat money, Bitcoin is a non-inflationary halal cryptocurrency

Disadvantages of Bitcoin

There is no way to recover your virtual money if you lose your password
Acceptance of bitcoin is still limited, even though more and more organisations are interested in it
This halal cryptocurrency is extremely volatile
Bitcoin is a deflationary currency, especially when it is held by speculators

Ethereum (ETH)

What is Ethereum?

Ethereum is a platform developed by Vitalik Buterin in 2015 for building decentralised applications. Ethereum has been declared Shariah-compliant by prominent Muslim scholars. According to the Shariah white paper on Ether published by Amanie Advisors, it is therefore halal to hold ETH.

Advantages of Ethereum

A reliable halal cryptocurrency: since its launch, the applications built on the platform have not been subject to censorship or fraud
A decentralised system that is not subject to any central authority
The platform’s founder has an excellent reputation within a large community
Institutions such as the Commonwealth Bank of Australia, AXA and the National Research Council of Canada have placed their trust in this currency

Disadvantages of Ethereum

A few security flaws could put the system at risk
Solidity, Ethereum’s programming language, is fairly technical and complicated for beginners
The network faces scalability problems despite the efforts made to ease congestion

Ripple (XRP) – Halal Cryptocurrency

What is Ripple (XRP)?

Ripple is a digital money transfer system, a currency exchange and a real-time gross settlement system. The Shariyah Review Bureau, licensed and regulated by the Central Bank of Bahrain, has ruled that XRP is Shariah-compliant. Launched in 2012, this cryptocurrency meets Islamic requirements.

Advantages of Ripple (XRP)

Fast transaction speed (between 2 and 4 seconds)
Low transaction fees
Transparent and secure transactions
Low volatility

Disadvantages of Ripple (XRP)

No reward mechanism, because the tokens were pre-mined
XRP tokens are not widely used
It strengthens the traditional banking system
The system is centralised, which is a threat to data security

OneGramCoin (OGC) – Halal Cryptocurrency

What is the halal cryptocurrency OneGramCoin?

In 2017, OGC won the award for best Islamic cryptocurrency, and in 2018 it received the award for best Islamic fintech product. OneGramCoin holds a Shariah certification issued by Al Maali Consulting Group. This crypto asset is backed by gold.

Advantages of the Halal Cryptocurrency OneGramCoin

The first crypto asset certified as Shariah-compliant
A stable investment because it is backed by gold
Partnership with PwC, a well-known financial firm, for auditing
A highly regarded halal cryptocurrency, including among non-Muslims

Disadvantages of the Islamic Cryptocurrency OneGramCoin

The offer is aimed mainly at Asian markets, despite the product’s global appeal

Stellar Lumens (XLM) – Halal Crypto

What is Stellar Lumens?

Lumens belongs to the Stellar network, a decentralised framework that holds a Shariah-compliance certification. Stellar Lumens was created to help solve the problems of cross-border transactions.

Advantages of XLM

Fast money transfers between users of the network
Very low transaction costs, which makes it a competitive way to send money
A secure network that is well protected against hacking
Easy exchange, as Stellar Lumens can be swapped into different currencies in a short time
A decentralised network that is not controlled by any authority

Disadvantages of XLM

Stellar Lumens are overvalued compared with the share of transactions actually carried out
A highly competitive segment

EOS (EOS) – Halal Cryptocurrency

What is EOS?

Created by Dan Larimer in 2017, EOS is a halal cryptocurrency whose main ambition is to replace Ethereum. Like its competitor Ethereum, EOS is a protocol for building decentralised applications. To do this, it uses the enhanced EOS.IO blockchain.

EOS has produced 1 billion tokens, of which more than 600 million have been distributed to date. EOS tokens can be used to obtain other currencies or as a store of value.

Advantages of EOS

A simple, inexpensive way to build applications
A good way for token holders to earn extra money by renting out their bandwidth
Excellent responsiveness thanks to its high bandwidth
The blockchain is free to use
Ultra-fast transaction speed (1.5 seconds)
A blockchain that uses less energy than some competitors

Disadvantages of EOS

Increasing competition from other cryptocurrencies
An unlimited number of tokens, which could push its price down over time
The system is too centralised
Users have no ownership rights relative to the block producers

Cardano (ADA) – Halal Cryptocurrency

What is Cardano ADA?

Cardano (ADA) is a halal cryptocurrency whose research-driven blockchain was started in 2015 by Charles Hoskinson, co-founder of Ethereum. It was funded through an ICO launched in 2017 that raised around 62 million dollars. It went live on 23 September 2017. The project aims to create decentralised applications and smart contracts.

Advantages of Cardano ADA

The platform has its own programming language (CCL)
Smart contracts on Cardano adapt to the user’s profile
Fast processing times (close to one million transactions per second)

Disadvantages of Cardano ADA

A mixed reception from the public
The blockchain uses a lot of energy

Theta (THETA) – Shariah-Compliant Crypto

What is Theta?

Theta is first and foremost known as a decentralised video streaming network. But THETA is also an Ethereum-based token. The cryptocurrency is used to reward providers of bandwidth and storage space. It is also used to pay video game creators. This halal cryptocurrency was created in 2018 by Mitch Liu and Jieyi Long.

Advantages of Theta

A multilingual, approved and secure platform
Other cryptocurrencies (such as Bitcoin) can be exchanged for Theta tokens
It significantly reduces the cost of distributing content
It gives users access to quality content on different devices

Disadvantages of Theta

It is not available on many platforms
Like other tokens, THETA is subject to volatility

Neo (NEO) – Halal Cryptocurrency

What is Neo (NEO)?

IFG (Islamic Finance Guru) lists NEO, the virtual currency of the NEO network created by Da Hongfei and Erik Zhang in 2014, among the cryptocurrencies recognised as Shariah-compliant.

After changing its original name, Antshares, in 2017, the network set itself the mission of creating a “smart economy”. This smart economy concept covers digital assets, digital identity and smart contracts.

Advantages of NEO

A large community of users
Very fast transaction speed
A legally acceptable and complete ecosystem
Pre-mined tokens (GAS is the currency used for mining and NEO is used for everyday transactions)

Disadvantages of NEO

A highly centralised blockchain
A constant threat from the Chinese government towards blockchains
The mining currency (GAS) is only accessible to a few users
Neither GAS nor NEO can be bought on the NEO platform; you have to exchange other cryptocurrencies for them

Tezos (XTZ) – Islamic Cryptocurrency

What is Tezos (XTZ)?

Tezos (XTZ) is a halal cryptocurrency used to pay usage fees and to reward the blockchain’s validators. It was created in 2014 by Kathleen and Arthur Breitman. The Tezos platform was built to run self-executing contracts.

Advantages of Tezos (XTZ)

A secure programming language
Practical application models
An experienced and competent team
High popularity

Disadvantages of Tezos (XTZ)

A lack of transparency on some aspects (team, partners, etc.)
Conflicts between the project’s leaders in its early days

What Is a Halal Cryptocurrency?

A halal cryptocurrency is a cryptocurrency that operates in line with the principles of Islam, and more specifically of Islamic finance. Many halal or Islamic cryptocurrencies obtain a certification issued by a competent body or a Shariah compliance committee.

Which Halal Cryptocurrency Should You Invest In?

Bitcoin (BTC) – The leading halal cryptocurrency. It is very popular (already legal and recognised in some countries), and interest from retail and institutional investors remains strong despite swings in its price.
Cardano (ADA) – A highly sought-after crypto with growing popularity and a large market capitalisation.
Ethereum (ETH) – A cryptocurrency that has become essential in the blockchain world and whose influence there is likely to grow.
Tezos (XTZ) – A very promising halal cryptocurrency with huge potential thanks to its applications, its security and the energy efficiency of its algorithm.

What Makes Halal Cryptocurrency Prices Move?

Changes in supply and demand
The amount of energy needed to secure the blockchain
The mining or blockchain difficulty level
Movements in the bitcoin price, which usually have a knock-on effect on other cryptocurrencies
The views of the public, the media, investors and politicians
The level of confidence investors have in it
The cryptocurrency’s various technical features
How easy it makes buying real-world goods

What Fees Do You Pay When Investing in Halal Cryptocurrencies?

Transaction fees, in particular spreads or commissions. These are charged by platforms on online trading or cryptocurrency exchanges. These fees are halal, because they pay the broker for its service.
Withdrawal fees. These apply when you decide to withdraw your funds to your bank account or e-wallet.
No swap fees and no interest. This type of charge is forbidden in Islam.

How to Invest in Bitcoin and Other Cryptocurrencies in a Halal and Effective Way

Use an Islamic or halal account (not a standard trading or investment account).
Always treat investing in halal cryptocurrencies as a genuine investment, not as a bet.
Find out which payment methods the platform accepts.
Choose a broker that offers a wide selection of halal tokens.
Look for an online broker with an easy-to-use interface, where it is simple to sign up and place trades.
Make sure you understand how the blockchain technology behind each cryptocurrency works.
Make sure you buy a real token from your broker, not a derivative. To check that it is a real token and not a derivative, see whether you can withdraw it to your private wallet. If you can, it is a real token.
Look into the quality of the developers behind the promising cryptocurrency and, if possible, check that their funding is halal.
Check that the cryptocurrency is Shariah-compliant.

How to Choose a Halal Cryptocurrency: Tips

Choose among the leaders of the halal crypto market: BTC, ETH, etc.
Don’t hesitate to consider a recent halal crypto with a small market cap, as long as it is innovative and promising.
Check the trading volume of the cryptocurrency you want to invest in. A high volume means demand is high and there are enough buyers.
Avoid highly volatile cryptocurrencies, that is, those whose price changes a lot and very often.
Look at the cryptocurrency’s supply. The more limited the supply of a digital currency, the scarcer it is, and the more its price tends to rise because of strong demand.
Take the cryptocurrency’s market capitalisation into account: the higher it is, the more stable the investment is likely to be.
Learn about halal cryptocurrencies so you can make better-informed investment decisions.
Consider the reputation of the people backing the cryptocurrency. If they lack experience, the halal crypto or blockchain project is clearly not the safest.
Look at competing cryptocurrencies to see their drawbacks and competitive advantages compared with the halal crypto you plan to invest in.