A token that an Islamic financial institution cannot hold is closed to that institution's capital before any risk committee meets. For those institutions, and for many Gulf and Malaysian investors, permissibility is a threshold question. The answer in September 2026 is that no single body has settled it for the whole market. Fitch Ratings said as much in a report dated 14 September 2026, as covered by the press: the absence of formal guidance from AAOIFI and the Islamic Financial Services Board limits harmonisation across jurisdictions, and Sharia views on cryptocurrencies remain divided, with some prominent scholars treating them as non-compliant and others as permissible subject to conditions.
What exists instead is a patchwork. There is one detailed regulator-level text, in Malaysia. There are opposing fatwas elsewhere, vendor screening methodologies of uneven depth, and a small number of sukuk issued on distributed ledgers. Every position below is attributed to the body that took it, and none is a ruling of our own.
The tests, and why the asset comes first
Three prohibitions recur in every discussion. Riba is, in broad terms, an increase without counterpart, chiefly interest on a loan or unequal exchange of the same commodity. Gharar is uncertainty in a contract, and scholars generally distinguish excessive gharar, which invalidates a transaction, from a tolerable degree. Maysir is gambling, a gain from chance rather than effort. Scholars differ on the edges of all three.
For a digital asset a fourth question sits ahead of them: what is it? The Malaysian council, for one, starts with classification, because the classification decides which rules apply. A token backed by gold is treated differently from one backed by nothing but a protocol.
What AAOIFI has, and has not, published
AAOIFI, the standard-setter for Islamic finance, has not issued a final Shari'ah standard on cryptoassets that we could find. Its home page, read on 29 September 2026, lists no digital-asset standard or exposure draft. A screening vendor, HalalScreener, states that as of July 2026 AAOIFI had not issued a final, binding standard dedicated to Bitcoin or any cryptocurrency. That is vendor material, and we cite it only as a pointer.
The subject has been aired. On 8 May 2023, at a roundtable during AAOIFI's 21st Sharia Council conference in Manama, the then Secretary General of the International Islamic Fiqh Academy, as the Academy's own event page records, defined digital assets as anything that can be stored and transmitted electronically and is linked to ownership or usage rights. He separated digital representations of real assets from digital currencies. He divided cryptocurrencies into three kinds: those backed by a paper currency, those backed by a commodity or precious metal, and decentralised ones not subject to any government's jurisdiction. Of the last, he said the ruling requires distinguishing currencies by their use and circulation, and that a ruler may still set conditions on their use within the country's borders. That was a speech, not a standard.
On sukuk, AAOIFI has worked on Shari'ah Standard No. 62. A July 2025 white paper by the asset manager FIM Partners, which is vendor material, described the standard as poised to be adopted and as emphasising true legal ownership of the underlying assets, genuine risk-sharing and returns linked to asset performance. We could not confirm its current status on AAOIFI's own site, so it should be read as a standard in preparation until checked. It matters for tokenised sukuk because putting a certificate on a ledger changes the record, not the structure beneath it.
Malaysia: the most detailed public text
The Shariah Advisory Council of the Securities Commission Malaysia is the one body whose reasoning on digital assets we could read in full. At its 233rd and 234th meetings, on 29 June and 20 July 2020, it resolved that digital currency is recognised as mal, an asset. It then split the field by backing:
- Digital currency based on technology with no underlying is categorised as 'urudh, goods, and is not a currency. It is not a ribawi item, so trading it is not subject to the rules of currency exchange.
- Digital currency backed by gold, silver or currency is a currency, and its trading is subject to those exchange rules.
- Digital currency backed by other ribawi items is treated as a ribawi item.
- A digital token is mal under 'urudh, provided the proceeds are used for Shariah-compliant purposes and the rights and benefits attached to it are Shariah-compliant. For mixed activities, the council's existing resolution on the use of sukuk proceeds and the business-activity benchmark used for screening Bursa Malaysia companies apply.
The council added that investment and trading in assets meeting those conditions on a digital asset exchange registered with the Commission is permissible. The resolution does not apply to assets outside the Commission's jurisdiction. Its text does not use the words gharar or maysir at all. In this instance the reasoning runs through classification, backing, use of proceeds and the regulated venue.
The Commission's digital-assets page lists approvals meeting by meeting, starting with Bitcoin, Ethereum, Ripple and Litecoin on 20 July 2020 and including Stellar on 10 December 2024. A resolution of 16 November 2023, at the 274th meeting, held two token-burning mechanisms permissible, burning transaction fees and burning in order to earn the right to validate transactions, provided they are fully disclosed in the whitepaper or agreed by the token's community. The council treated both as payment for a right or a service. The law firm Allen & Gledhill reports that revised Guidelines on Islamic Capital Market Products and Services, issued on 30 March 2026, require exchange operators offering Shariah-compliant digital currency to obtain the council's endorsement first. The bulletin gives no effective date, and we did not confirm one.
Where authorities disagree
Egypt's Dar al-Ifta, under its then Grand Mufti, ruled in December 2017 that buying, selling and leasing cryptocurrency is forbidden. Its stated grounds included gharar, because values are unclear and the assets have no physical backing, along with fraud, the security of wallets and exchanges, and the view that issuing currency is a prerogative of the state.
Fitch reports that the Darul Ifta at Jamia Darul Uloom Karachi in Pakistan issued a fatwa that cryptocurrencies do not constitute wealth under Sharia, which press coverage of the report dates to June 2026. Fitch also reports that the fatwa was signed by Muhammad Taqi Usmani, whom it describes as chairman of the AAOIFI Sharia Board. That is a fatwa from a Pakistani institution, not an AAOIFI standard, and we have not read the fatwa itself. Set beside Malaysia, the contrast is instructive. Both bodies ask whether the thing is property, and they reach opposite answers.
Fitch also reports that in 2025 the Higher Shari'ah Authority of the Central Bank of the UAE deemed dealing in Bitcoin permissible, which enabled conventional and Islamic banks to offer cryptocurrency services. We have not seen the authority's own text and rely on Fitch as reported. The Gulf picture is not uniform: Fitch describes Saudi Arabia as having enacted no legislation governing cryptocurrencies. Our piece on what changed in Abu Dhabi covers the licensing side.
How screening providers assess tokens
Commercial screeners fill part of the gap, and their material is not a fatwa. Sharlife publishes a methodology with three pillars: Shariah analysis of the project, the token and its reward system; legitimacy analysis covering smart-contract audits, community engagement and whitepaper transparency; and analysis of the team. It cites the Malaysian council's 2020 classification. HalalScreener states that each coin is assessed qualitatively on what it does, its function, the project behind it and how it is used, rather than on the financial ratios used to screen equities. Sharlife's reward-system test is where staking would fall, but neither provider publishes pass-or-fail thresholds for staking or lending. Read them as evidence that screening exists, and check who sits on a provider's Shariah board before relying on one.
Staking, lending and derivatives
This is the thinnest area. The Commission's digital-assets page, as we read it, lists no separate resolution on staking, lending or derivatives, and we found no AAOIFI text on them. What follows is therefore the questions a board would put, not answers.
Staking. The question is what the reward pays for. If it compensates validation work, a board may consider whether it is a fee for a service, the reasoning the Malaysian council applied to burning to earn validation rights. If it functions as a fixed return on capital lent out, the riba question arises. Liquid staking adds a second layer, a claim on a claim. The mechanics, slashing and custody are in our note on institutional staking.
Lending. A board would ask whether a protocol that pays a stated rate for deposited assets is paying interest, the core riba concern, or whether the return comes from real trade or shared profit. See crypto lending after 2022 for how the market works.
Derivatives. In a report of 11 June 2026, Fitch, as reported, highlighted a scarcity of Sharia-compliant options for credit, equity, commodity, futures and digital-asset derivatives. For leveraged and perpetual products, the gharar and maysir tests above are the ones a board would apply first. The mechanics of perpetuals are in our note on funding rates.
Sukuk on a blockchain, with dates
Two issuances are documented well enough to describe.
BMT Bina Ummah, 16 October 2019. Blossom Finance, the platform provider, announced that an Indonesian microfinance cooperative had raised 710 million rupiah, about US$50,000, through a one-year mudarabah sukuk on Ethereum. Blossom described it as the world's first primary sukuk issuance on a public blockchain. Investors received a share of profit, not a fixed return. The smart contract managed records, assignments, calculations and payments, and transfers were limited to approved parties. The announcement is issuer-side material. It names no Shariah board and does not address Indonesian regulatory status.
Khazanah Nasional, 28 April 2026. Malaysia's sovereign investor, in collaboration with the Securities Commission, announced that it had priced what both described as Malaysia's first tokenised sukuk: RM100 million nominal, one year, issued under the Sukuk Danum Programme of up to RM20 billion and structured on wakalah bi al-Istithmar, investment agency. Distributed ledger technology creates a digital record of the sukuk. The investors named were Credit Guarantee Corporation Malaysia, Kumpulan Wang Persaraan and OCBC Bank (Malaysia), with CIMB and Maybank named as key financial institutions. The releases do not name the ledger. Trade press reported it as Aeris Chain, a locally developed private blockchain.
RAM Ratings said on 8 May 2026 that the programme was revised to allow a digital representation of the sukuk, a digital twin, alongside the existing certificates, that sukukholders approved this on 13 March 2026, and that the revision is credit-neutral, with Khazanah remaining the ultimate obligor and no change to legal enforceability. That is the practical lesson. The token sits on top of an existing legal and Shariah structure and does not replace it. Neither the Commission's nor Khazanah's release names a Shariah adviser for the pilot. The wider mechanics of moving instruments on-chain are in our piece on tokenisation from pilot to production.
What is unresolved
There is no standard-setter text on cryptoassets to point to. Regulators that engage, Malaysia most visibly, do so through their own councils. Fitch, as reported, suggests that in some markets blockchain-based, Sharia-compliant asset-backed finance may gain traction sooner than bank-led cryptocurrency activity. Anyone allocating should obtain the written opinion of their own Shariah board on the specific instrument and venue. This is a summary of published positions, not legal, Shariah or investment advice.
Proof of Talk is an invitation-only summit for capital, digital assets and AI, and admission is by application and review. Its Abu Dhabi edition takes place at Louvre Abu Dhabi, in the Saadiyat Cultural District, on 3–4 December 2026. See the Abu Dhabi edition.