Egypt’s foremost religious leader, or imam, has called for a ban on cryptocurrencies including bitcoin after claiming they are forbidden under Islamic law.
Sheik Shawki Allam, the Grand Mufti (the highest official of religious law) in Egypt has said it is forbidden to trade cryptocurrencies – selling, buying or leasing them – after issuing a fatwa, a ruling of Islamic law issued by a recognized authority (in this case Egypt’s Grand Mufti). The fatwa is seen as ruling under religious law and isn’t legally binding, technically. However, it’s noteworthy that Egypt’s Grand Mufti saw reason to weigh in with his take on cryptocurrencies after their growing popularity among retail investors around the world.
An excerpt from the fatwa, as reported by Egyptian daily Ahram read:
“Bitcoin is forbidden in Sharia [law] as it causes harm to individuals, groups and institutions.”
Cryptocurrencies should not be used in transactions, he reasoned, because it isn’t covered or backed as a financial instrument by the Central Bank of Egypt (CBE). The lack of a tangible asset backing the cryptocurrency and the anonymity in their transactions that could lead to tax evasion, money laundering and terrorism financing are all cited as concerns by Allam.
A day prior on December 31, Mufti’s counselor Magdy Ashour went a step further to state bitcoin is used to finance terrorism.
He told Egypt Today:
“This currency is used directly to fund terrorists. It has no set rules, which is considered as a contract annulment in Islam and that is why it is forbidden.”
The Grand Mufti’s fatwa is certain to find support from Egypt’s central bank which previously squashed speculation that the authority was considering allowing banks to recognize and handle cryptocurrencies like bitcoin.
“For stability of the Egyptian banking system, the banks deal with the official currencies only, and never deal with any virtual currencies,” stated CBE deputy governor Lobna Helal at the time. On December 17, Egypt’s financial watchdog announced that bitcoin trading is illegitimate in the country, warning citizens against trading them.
Featured image from YouTube/CNN.