Egypt’s Grand Mufti Shawqi Allam has declared that the trading of the digital currency Bitcoin is unlawful; thus, issuing a sternly worded fatwa (religious edict) that trading with the cryptocurrency can lead its users to “fraud, betrayal and ignorance” and could be used by terrorists.
Allam also said that terrorist and criminal groups can abuse the crypto-currency to fund their illicit activities such as moving drugs and weapons, Daily Mail reports.
Egypt’s Grand Mufti is the highest official of Islamic law in Egypt and the one who issues legal opinions, fatwas and interpretations of Islamic jurisprudence.
The theological leader said in a published ruling that Bitcoin – launched in 2009 and based on a peer-to-peer payment system – poses ‘high risks to individuals and states.’
Suggesting his decision to declare a fatwa was based on discussions with economic experts, he concluded bitcoin is not permissible as it undermines the state – a central feature in Islamic sharia.
Minting and issuing currency is an ‘absolute right’ of monetary institutions and ‘one of the most specific functions of the state,’ said the country’s official interpreter of Islamic law.
“This currency is used directly to fund terrorists,” Ashour told Egypt Today, adding that its usage could cause major damage to the country’s economy.
“It has no set rules, which is considered as a contract annulment in Islam, that is why it is forbidden,” the counsellor said.
Last month, a team of Australian researchers found that nearly half of bitcoin trades they tracked over the past decade were used for illegal activities.
“Bitcoin is like all other currencies so what are the reasons that have suddenly made it so unlawful” said Atef Al Khateeb, a Cairo based Bitcoin trader who has set up a Facebook group to discuss the finer points of crypto-currencies and to help other new traders understand how to invest their money.
“It’s all commerce in the end, you win some, you lose some. Even the Prophet Muhammed was a trader”, he told Quartz.
The stateless digital currency has grown this week on the back of early Facebook investor, Peter Thiel’s bet rising in its price to over $15,000 after its bubble burst late last year with a sharp drop of 30% over six straight days.
There are no reliable figures on the number of bitcoin users in Egypt as its first bitcoin exchange only went live in August.
Bitcoin has been booming in other African countries such as Nigeria and Zimbabweowing to bypassing capital controls and weak foreign exchange markets.
Bitcoin is a virtual currency created from computer code.
It and other virtual currencies use blockchain, which records transactions that are updated in real time on an online ledger and maintained by a network of computers.
Its value surged as high as $19,500 in December from around $1,000 last January, but has slipped back after a series of warnings from governments and analysts about the risk and volatility associated with cryptocurrencies.