Islamic finance crypto limited by divergent Shariah views

The absence of formal guidelines limits harmonisation across jurisdictions, says Fitch.

Cryptocurrency offerings in Islamic finance are expected to remain limited to certain markets due to lack of guidance and divergent religious interpretation, said Fitch Ratings.

Malaysia is amongst the most open jurisdictions for cryptocurrency adoption in Islamic finance, with the local securities commission declaring some cryptocurrencies as Shariah compliant, Saif Shawqi, director for Islamic finance at Fitch Ratings, said in a video published on 5 October 2026.

The overall total trading value on regulated digital assets exchanges increased by 23% year-on-year (YoY) to over $4b in 2025.

Adoption outside certain markets is likely to remain uneven, according to Shawqi. This reflects “divergent religious interpretation, lack of guidance from global Islamic financializing bodies, and still cautious bank participation,” he said.

In Malaysia, digital asset exchanges make up just 2.5% of domestic equity market value traded. Bank participation remains largely restricted to services for registered operators, Shawqi said.

“Sharia views on cryptocurrencies are mixed,” Fitch Ratings said in a report on 14 September. “Some prominent sharia scholars consider them non-compliant with sharia principles, whilst others deem them permissible subject to certain conditions.”

Fitch said that the absence of formal guidance from AAOIFI and the IFSB also limits harmonisation across jurisdictions.

In the Middle East, the United Arab Emirates (UAE) is emerging as a global hub for virtual assets, Shawqi said, after the higher shariah authority of UAE deeming dealing in Bitcoin permissible in 2025.

A small number of conventional and Islamic banks have begun offering cryptocurrency brokerage and custody services since, said Shawqi.

Bahrain hosts nine crypto asset service providers.

In contrast, Saudi Arabia has not enacted legislation governing cryptocurrencies, Shawqi said.

Meanwhile, a number of Islamic banks across the six Gulf Cooperation Council countries—Turkey, Pakistan, Jordan, and Egypt—are indirectly involved in the cryptocurrency ecosystem by acting as payment gateways on licensed exchanges, Fitch said.

Most of the Fitch-rated banks have not developed material revenue streams from cryptocurrency trading, brokerage, custody, or financing, according to Shawqi.