A popular Saudi cleric has ruled that cryptocurrencies are prohibited under Islamic law because they are “ambiguous” and provide anonymity to criminals.
Assim al-Hakeem made the religious edict this week on his programme Ask Zaad, as bitcoin prices shot above $10,000 for the first time.
“We know that bitcoins remain anonymous when you deal with it… which means that it’s an open gate for money laundering, drug money and haram (forbidden) money,” Hakeem said.
“There is a lot of ambiguity, if I have dollars and you have euros and we want to exchange this is permissible in Islam with the condition that it is hand-to-hand… in virtual currencies you don’t have this,” he added.
The cleric’s ruling comes after Turkey’s top religious body also decreed that bitcoins were incompatible with Islam because their value is “open to speculation” and they can be used in “illegal activities”.
Bitcoin’s use on darknet marketplaces, where users can exchange the cryptocurrency for goods like drugs and guns, and among cybercriminals has raised suspicions about the virtual money.
A bitcoin was worth about $1,000 at the start of the year, but is now more than $11,000.
The rise in the price of bitcoin and other virtual currencies this year has divided the financial community on its merits and whether the value might come crashing back down.
Bitcoin was created about a decade ago as an alternative to government-issued currencies.
Transactions allow anonymity, which has made it popular with people who want to keep their financial activity, and their identities, private.
The digital coins are created by so-called “miners,” who operate computer farms that verify other users’ transactions by solving complex mathematical puzzles.
These miners receive bitcoin in exchange. Bitcoin can be converted to cash when deposited into accounts at prices set in online trading.
Whereas virtual currencies were initially used primarily as a method of payment, in recent months they have become a hot investment among speculators.