A an undated AFP photo shows a conference on cryptocurrencies.
ERBIL, Kurdistan Region — The KRG’s Supreme Fatwa Board has ruled against dealing in OneCoin, a type of cryptocurrency, most notably because of unknown sources dealing with it.
The board met in Erbil to discuss the issue after an inquiry by an individual. The board did summarize that virtual currencies in their current form are not in line with Islamic law, but only named OneCoin, omitting the most popular cryptocurrency, Bitcoin.
“Our board, following sufficient investigations and discussions, the following fatwa was ruled unanimously,” reads a statement from the board, which belongs to KRG’s Union of Islamic Religious Scholars.
OneCoin has been described by the NASDAQ as a “Ponzi scheme promoted as a cryptocurrency with a blockchain.” Its blockchain, or digital accounting ledger, is private and governments in Bulgaria, India and Vietnam have raided or seized assets in OneCoin offices. In 2017, the coin announced an initial public offering for investors in 2018, but that has yet to come to fruition. It is not currently possible to trade OneCoin for other digital currencies on major online exchanges.
“It is a virtual currency, and Islamic law does not approve of dealing in virtual currencies,” stated the fatwa published on April 5, but seen by Rudaw on Thursday.
OneCoin is one of hundreds of digital cryptocurrencies which have emerged after Bitcoin gained widespread use and attention as the first decentralized digital cryptocurrency in 2009. Bitcoin differs in that its blockchain, or digital ledger system, is distributed across the internet. Bitcoin’s source code is also open, meaning anyone is free to change it.
“Dealing in electronic currencies and their likes in the view of Islamic jurisprudence is complicated, prohibited and wrong for the following reasons,” the fatwa continued.
Another reason why virtual currency is not good, according to the fatwa, is its obscurity in terms of its source as the one issuing it is not known: “Jurisprudence does not approve of obscure dealings.”
The board also cited a lack of recognition by international financial institutions and banks as the reason why the cryptocurrency is not allowed to be dealt in.
“Lacking formal guarantees from relevant economic institutions, that is why any money spent in this regard goes to unknowns and is similar to gambling,” the board explained.
Gambling in Islamic law is considered to be haram, forbidden or proscribed.
“It does not fall into any lawful dealing so far, that is why we call on citizens to refrain from dealing in electronic currencies, especially OneCoin, because, as we said, it does not encompass any lawful principles,” the Fatwa argues.
The fatwa, nevertheless, does not entirely eliminate accommodating cryptocurrency in the future, saying whenever it is produced in line with Islamic laws and the above reasoning, it can be dealt in.
“The problem is not in dealing in with electronic business, but the conditions and its formulation,” the statement eventually adds.