TOWARDS AN INTERPRETATION OF CRYPTOCURRENCY AS A COMMODITY FROM MAQASID AL-SHARI’AH PERSPECTIVE

Abstract

From days of simple barter to the age of digital entries, the evolution of money is proof of a human sense of resourcefulness. Besides the universal acceptance of money as wealth, conventionally it is regarded as a commodity and according to Islamic jurisprudence, though money is used as a medium of exchange and store of value, it cannot be sold at a price higher than its face value or rented out. There has recently been increasing work on the position of commodity money and fiat money in the context of Islamic finance theories and commodity markets. Whereas traditional fiat currency plays a vital role in the socio-economy, digital or cryptocurrency starts to persuade the world economy under the ledger technology. Unlike fiat money, the cryptocurrency spectrum today, under its extreme configuration, intends to offer remarkable opportunities. The conventional works that have provided several studies on the impacts of cryptocurrency in the financial services industry and commodity markets, proportionate to the analysis of the classification of wealth pertaining to digital currencies in order to review the relationship between crypto-token and crypto-commodity. There have been few responses from the Islamic perspective, but not particularly in the light of Maqāsid. Therefore, the paper explores the nature of wealth and the principles involved in the acquisition and protection, and classification of wealth according to Maqāsid al-Shari’ah. With particular reference to a treatise of Maqāsid, the paper investigates five simultaneous characteristics and objectives of wealth deliberated by Ibn Ashur (2001). The last part of the paper analyzes the relationship between the five characteristics of wealth and the cryptocurrency ecosystem, such as tokens, initial coin offerings (ICOs), and cryptocurrency derivatives, to review the research opportunities to propose a more comprehensively sound study in the Maqasid framework.