Islamic Cryptocurrency: A Shariah Principles' Perspective Study on Current Financial Development

Abstract

The rise of cryptocurrency has redefined financial landscapes, but its compatibility with Islamic principles remains a topic of critical exploration. This paper examines the concept of Islamic cryptocurrency through the lens of Shariah principles, offering an analytical perspective on its alignment with ethical and financial standards rooted in Islamic jurisprudence. As decentralised finance gains global traction, the study investigates the viability of integrating cryptocurrencies into Islamic financial systems while ensuring adherence to key principles such as riba (usury), gharar (uncertainty), and maslahah (public benefit). Utilising a qualitative approach, this research evaluates the features of existing cryptocurrencies and their compliance with Shariah guidelines. By analysing case studies, regulatory frameworks, and financial innovations, the paper highlights the opportunities and challenges of adopting Islamic cryptocurrency in modern economies. Key areas of focus include transparency, asset backing, and ethical governance. The findings reveal that while certain cryptocurrencies offer potential for Shariah compliance, others require structural modifications to eliminate speculative elements and enhance accountability. The study concludes by proposing a framework for designing Shariah-compliant cryptocurrencies, emphasising the role of Islamic scholars, fintech innovators, and policymakers in fostering ethical financial ecosystems. Recommendations include adopting blockchain technology for greater transparency, establishing robust regulatory oversight, and promoting financial literacy to ensure widespread acceptance and accessibility. This paper contributes to the discourse on sustainable financial development, advocating for a balanced approach that respects Islamic values while embracing technological advancements.