F1000Research (Aug 2023)
Islamic legal perspectives on digital currencies and how they apply to Jordanian legislation [version 2; peer review: 2 approved]
Abstract
Background: The industrial transformation requires a speedy shift to financial digitization. One of the needs for financial digitalization in the study of Islamic contracts and Islamic business law is the use of digital platforms with digital currencies. Regarding the merits and downsides of its Sharia restrictions and its halal certification, which is currently under discussion, digital currencies and perks have generated controversy in Jordan and other Islamic countries. Methods: This study intends to analyze the legal foundations of digital currency from Jordanian and Islamic legal perspectives. The descriptive-qualitative research approach was utilized, and data collection processes included documentation and a literature review. All legal possibilities that may be drawn from Islamic law in order to investigate the legality of digital currencies are explored further and used to obtain the conclusions of this study. Results: A review of Sharia reasons and consideration for the wellbeing of the people suggests that digital currencies in their current form are incompatible with it and must adhere to the stipulations of Islamic finance. Therefore, digital currencies are unsuitable as a store of value or wealth due to their erratic swings, lack of purchasing power, and instant responsiveness to any technical problem, technical penetration, or official circumstance. Due to market instability, digital currencies can't be utilized to defer payments, settle debts, or repay loans. Conclusions: Digital currencies are speculative; not real money. Most of those who have this money are speculators seeking a quick payoff. Sharia views digital currency trading as gambling due to its high degree of volatility. Jordan's government should regulate digital currency use to meet demand. Digital currencies must be addressed under e-commerce laws.
