With the rise of cryptocurrency, many people are exploring different ways to trade these digital assets. One method that has gained popularity is using automated trading robots.
These robots can buy and sell cryptocurrencies on behalf of the user, often taking advantage of price fluctuations to generate profit. But what does Islam say about using such robots for trading?
We’ll look into the Islamic perspective on using robots for cryptocurrency trading. We’ll consider the principles of immediate exchange and the rulings on currency transactions in Islamic finance.
Is Using Robot In Trading For Cryptocurrency Valid in Islam?
Yes, trading in cryptocurrency using a robot is valid in Islam, provided certain conditions are met.
Using a robot to deal in real currency or cryptocurrency is permissible if the robot ensures immediate exchange.
This means that when a cryptocurrency is bought, it must be immediately transferred to the buyer’s account. Similarly, when a cryptocurrency is sold, the funds must immediately enter the seller’s account.
This immediate exchange is crucial because, in Islam, currencies are treated similarly to gold and silver.
Evidence
- The Prophet Muhammad (peace and blessings be upon him) said: “Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, salt for salt, like for like, same for same, hand to hand. But if these commodities differ, then sell as you like, as long as it is hand to hand [that is, exchanged immediately]” (Muslim 1587).
- The Islamic Fiqh Council of the Organization of the Islamic Conference (OIC) states that paper currencies are legal tender and are subject to the same Islamic rulings as gold and silver regarding riba (usury), zakah, payment in advance (salam transaction), and so on (Majallat al-Majma‘, issue no. 3, vol. 3, p. 1650; issue no. 5, vol. 3, p. 1609).
The hadith from Prophet Muhammad (peace and blessings be upon him) emphasizes that when exchanging commodities like gold and silver, the transaction must be immediate.
Since cryptocurrencies are considered akin to currencies in Islamic finance, the same rule applies. This means that any trade involving cryptocurrencies must involve immediate transfer to be valid.
The statement from the Islamic Fiqh Council clarifies that paper currencies and, by extension, cryptocurrencies are treated like gold and silver in Islamic law.
Therefore, the principles of immediate exchange and avoiding riba (usury) apply to cryptocurrency transactions. Using a robot for trading is permissible as long as it ensures these conditions are met.
In this context, the trading robot acts as an agent. It buys, sells, and ensures immediate receipt of the traded assets, thus fulfilling the requirements set by Islamic finance principles.
Bottom Line
Trading in cryptocurrency using a robot is permissible in Islam as long as the condition of immediate exchange is met.
The robot must ensure that the cryptocurrency purchased is immediately transferred to the buyer’s account and that the proceeds from any sale are immediately transferred to the seller’s account.
By adhering to these principles, Muslims can engage in cryptocurrency trading in a manner consistent with Islamic finance rules. And Allah knows best.
Got a question? Feel free to ask mufti and get quick answers.
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