Cryptocurrency Legalization and benefits

 

With human evolvement, new inventions have also been witnessed since time immemorial. Digitalization of the whole planet is an amazing technological advance which is nothing less than a miracle. Some technologies still prevail while some have fizzled out over time. Bitcoin and blockchain are some of the more recent revolutionary technologies set to create disruption across the world.

Before we discuss the legal status of cryptocurrency in Pakistan, we need to address several questions: Is it halal or haram according to settled Islamic financial principles? If it is halal then is it also legal? Who is going to be responsible in case someone suffers a loss? Will a court of law entertain any breaches? Can we tailor the growth of bitcoin in a way that it complies with domestic laws? Can we legislate on it at all?

Cryptocurrency is like digital gold. If you buy it today and hold on to it for some years like gold or real estate, its price may increase. However, there is also a risk of loss as it shares the same concept of profit-and-loss as gold and physical assets (land, housing, etc.). In terms of Shariah, bitcoin falls into the category of “goods”. The criteria under which wealth has been defined by jurists can include bitcoin as well. Bitcoin can be stored on any electronic device and even if a person does not store it in a device and keep using it over the years, it will still remain safe like gold. This proves that it is self-contained and does not need a receipt, cheque or draft.

According to Article 18 of the Constitution of Pakistan 1973, every citizen has freedom to trade and carry out any business subject to law. According to Article 8 of the same Constitution,

However, paper currency is expected to vanish soon and digital currency is set to become the main source of trading. Through digital currency, money can be sent from one part of the world to another in no time because of the decentralization factor. Digital transactions can also be easily regulated. Moreover, bodies such as the Federal Board of Revenue (FBR) will not have to wait a whole year to collect tax. Taxes can be paid whenever a digital transaction is made.

From silver coins and gold to paper and fiat currency, cryptocurrency may well be the next step in the evolution of money. Any of its demerits can be curtailed by monitoring and regulating its use, but in order to adapt to technological changes and keep up with the global economy, our flawed financial institutions must update themselves.