Assalamu 'alaykum Mufti Sahib,
First of all, may Allah reward you for the time and energy you spend for the benefit of brothers and sisters looking for halal ways of investing. Thanks to your efforts a lot of Muslims are being educated about islamic finance and are protected from earning money that’s haram. May Allah accept your hard work and good deeds and bless you a long and healthy life!
Before I decided to share my question in this topic, I tried as much as I can to search for the answer in past topics. My question has got to do with earning passive income in the form of fixed monthly payouts as a reward for staking coins for a blockchain that uses Proof of Staking to validate transactions and reach consensus. In my search in this forum I came across some of your answers like:
“The entire structure and particulars of the token would have to be addressed before being able to come to a conclusion to this query.”
and:
“A fixed return can be structured in multiple ways. For example, in Ijarah and Murabaha, a fixed return is fine. But in other contracts like mudaraba, a fixed return is problematic, you can only have a fixed percentage of profit share and not a guaranteed return.”
and:
"Staking comes in different forms. It all depends on the underlying mechanics. If interest or any other impermissible activity is involved, it will not be permissible.
At present, we are not in a position to comment on individual tokens and consensus protocols on this forum."
and:
“Staking is not a straightforward matter. Given the fact that these are emerging ideas and practices, each staking protocol must be reviewed and studied.”
but also:
“This is very similar or close to Riba and has major Shariah concerns. Best to avoid the product altogether.”
I don’t want to ask you what others have asked before me and you already answered. And I understand why you are not in a position to comment on individual tokens and consensus protocols on this forum. But I do believe you can help me. Especially because we’re planning to partially fund our mosque and madrasah with profits and rewards of different cryptocurrencies. And we want to make sure that those funds are halal.
To understand my question a bit better…
We’re currently negotiating with a company that is running and managing over 2500 different master nodes for different cryptocurrencies. It would be impossible to screen all those cryptocurrencies. But we could offer that company a set of conditions for selecting the cryptocurrencies that they will manage for us.
So this is my question…
If you would screen a certain coin, token or blockchain that uses Proof of Stake as validation and pays out monthly rewards for users who stake their coins, how would you perform such a screening?
Formulated differently…
How can I determine for myself if I would perform the screening myself if those rewards and/or profits would be permissible? What set of criteria or guidelines would you use in your screening to reach a conclusion about a specific coin, token or blockchain?
I already found this document on this forum:
Is there anything in particular you’re researching when it comes to rewards for staking? Or anything besides what’s in that document?
I don’t want to take much of your time. But I do want to make sure that what we’re doing is halal. And you’re the only person I’ve found that has knowledge about the Islamic rulings for finance and investing and also has knowledge about cryptocurrencies. So I don’t know who else I could turn to. And I hope you can help me with enough information so that I don’t have to bother you for unnecessary questions.
I’m looking forward to your reply. Thank you in advance!
Wassalaam,
Hashim