Bitcoin Mena: Crypto could be ‘revolutionary step’ for Islamic finance

Cryptocurrency offers viable alternative to traditional finance, experts tell event in Abu Dhabi

Harris Irfan, chief executive of Cordoba Capital Markets, speaks at the Bitcoin Mena event in Abu Dhabi. Pawan Singh / The National

Bitcoin is challenging conventional financial systems and offers Muslims an alternative to interest-based money that aligns with Islamic principles, experts have told the Bitcoin Mena conference held at Adnec in Abu Dhabi.

During a panel discussion on Monday, economist, best-selling author and Bitcoin expert Saifedean Ammous said: “If you care about your religion, you should consider moving away from dollars and government money, and getting into Bitcoin.”

The two experts agreed that cryptocurrency could be a revolutionary step forward for Islamic finance, moving away from traditional banking systems that rely on Riba.

Mr Ammous pointed out that Islamic finance has long forbidden Riba, the practice of earning money through interest and which is deeply embedded in modern financial systems. “Money is created through interest-based loans, which is prohibited in Islam," he said. “Even if you're not directly involved in lending, using government-issued money means participating in a system based on Riba."

However, Mr Ammous said Muslims now have a viable alternative to Bitcoin that does not rely on interest for its creation.

He added that Bitcoin does not need to be created through debt and said the cryptocurrency exists independently of Riba, unlike fiat currencies, such as gold and silver.

Harris Irfan, chief executive of Cordoba Capital Markets and adviser at Onramp Mena, agreed, acknowledging that many Islamic scholars have criticised Bitcoin for its volatility and lack of government backing.

“Many scholars claim Bitcoin is haram [forbidden] because it lacks intrinsic value and isn't supported by a government,” he said.

He noted that after 60 years of modern Islamic finance, the industry has yet to move beyond fiat financing. “All we're doing in this industry is reverse-engineering conventional debt based on fiat money and fractional reserve banking,” Mr Irfan said.

He added that every time an Islamic bank enters a financing contract with a customer, it creates new money, much as a conventional bank does.

Mr Irfan noted that people have yet to move beyond conventional wisdom. “We hand down from generation to generation that this is the way to do economics and banking,” he said.

Both experts addressed the hesitation among some religious authorities to accept new financial technology.

Mr Ammous criticised this cautious approach and said many scholars are quick to dismiss Bitcoin as forbidden without fully understanding its value. “Unfortunately, religious authorities have historically taken the easy way out by thinking: if it's new, then let's just say 'no' and label it as forbidden,” he said.

Mr Irfan said a new generation of younger scholars is recognising Bitcoin's value as a more Islamic form of money that could replace the gold dinar that once fuelled the golden age of Islamic civilisation.

For him, Bitcoin has already proven its worth in practical terms. He cites his experience using cryptocurrency to bypass obstacles in traditional banking systems. “Bitcoin is freedom money,” he said, which allows for smoother transactions in regions where conventional financial institutions impose restrictions.

In 2014, Bitcoin was trading at about $500 per coin. A decade later, its price had soared to more than $100,000, marking a significant milestone in its evolution. The rise highlights Bitcoin's growing acceptance and its potential to reshape global financial systems.

What began as a niche digital asset has now become a mainstream financial instrument with far-reaching implications.

Mr Ammous said some religious scholars are doing a disservice to Muslims by forbidding Bitcoin, noting many Muslims could have greatly benefited from it a decade ago.

Mr Ammous and Mr Irfan believe Bitcoin offers a promising future for Islamic finance – one that is decentralised, transparent and free from interest-based practices.