Zakat Crypto
Candi Ruman
It is useful to understand that any crypto-asset, whether it be a currency or a platform token, if purchased with the intent of capital gain and to resell in the short-term, then these will be 100% Zakatable no matter the nature of the asset.
Security tokens represent a fraction of an underlying asset usually issued by a legal entity. If these are held, they would be Zakatable depending on the underlying asset. If that asset is liquid, cash, cash-like, gold etc. then it would be zakatable.
Platform tokens are used within decentralised apps (dapps) and have a range of uses. If these are purchased with the intention to use within an ecosystem, like a game or dapp, and not to resell, then these are not Zakatable.
Remember the rule: any crypto-asset bought to resell is 100% Zakatable regardless of what it is. The Zakat status of a crypto-asset bought to hold indefinitely would depend on the underlying asset itself.
The 25,000 worth of asset-backed token in resale property is also 100% Zakatable, because an intention to resell a property renders the entire property Zakatable, and the token is simply a representation of that property intended for resale.
Yes, cryptocurrencies are Zakat-eligible wealth that Zakat comes due on if its value reaches the threshold (niṣb) of Zakat on money and one has possession of it at its niṣb for a lunar year (ḥawl). (See the Zakat Calculator for help).
Its value derives, like that of the fiat currencies of most nations (called fiat because they are not backed up by any commodity, like gold), from its capacity to store value and its acceptance as a unit of exchange, in the case of crypto, over the internet.
One calculates Zakat on his or her cryptocurrency holdings in the same way Zakat payment is calculated on money. The Prophet, on him be peace, who set the Zakat rates on all five types of Zakatable wealth, specified the Zakat rate for currency at 2.5%. This is Revelation (waḥy). (See What Requirements Qualify Wealth for Zakat?).
Islam is a religion that has a contemporary renewable outlook with flexible principles in all aspects of life. One of the manifestations of that is zakat on cryptocurrency.
Zakat is calculated at 2.5% from a specified value called nisab; the minimum amount of money that has been kept for a full lunar year or over so that it becomes zakatable.
For example, if your crypto savings for one lunar year (Hijri year) reaches or exceeds the nisab point, you can multiply its total amount by 2.5%, and the result will be the required zakat.
Typically, there is no disagreement in the case of long-term investment, as zakat will be paid on cryptocurrency of all kinds. In such a case, it is always 100% zakatable.
Some Islamic opinions say that cryptocurrency zakat, for the short-term must be paid as it is an asset, and others say that there is no zakat on cryptocurrencies due to their regular circulation.
If the currency is popular and has a huge authority (like Bitcoin and Ether); meaning it is a store of value and a means of circulation at the same time, then the intention behind carrying it is considered.
On the other hand, if it is not popular in daily payment and less used in transactions but still has authority, that means it is only a store of value and bears the intention of long-term investment, so it will be zakatable.
Security tokens are peripheral devices used to gain access to an electronically restricted resource, and they represent a fraction of an underlying asset and are usually issued by a legal entity.
In case you want to donate your zakat to people in need, like refugees, you can reach out to a reliable NGO like Bonyan, which uses the donations that it gets in the best way to assist refugees.
Nearly every major faith has a religious law or tradition of charitable giving. Zakat, a form of almsgiving specific to Islam, is an annual duty of Muslims around the globe who meet certain financial criteria.
If you hold cryptocurrency and would like to donate in cryptocurrency rather than cash, that option is available to you. In fact, more than one thousand nonprofit organizations have begun to accept cryptocurrency donations.
Thousands of charitable organizations support donations in a variety of cryptocurrencies such as Bitcoin, Ethereum, Solana, USDC, and even Shiba Inu. These crypto-enabled nonprofits span the full range of causes and impact areas, from disaster relief to poverty reduction.
No matter how you give, we applaud your commitment to improving the lives of others through charitable giving. If you wish to give Zakat using some of your crypto, The Giving Block is your one-stop destination to find and support organizations making a positive impact on the world.
Zakat paid to the verified wallet address below will be directly paid out to zakat-eligible recipients (those living in extreme poverty) and used for their basic needs and necessities, such as food, clothing, and school supplies.
The following wallet addresses will be received directly by the Rahmania Foundation. They are exchange addresses on the Indodax cryptocurrency exchange (a fully licensed and regulated crypto exchange in Indonesia).
Because it is a currency and you are holding it because it is a currency, then you must pay Zakat on it. If you were holding the same amount of value for the same purpose at the time of the Prophet, do you have any doubt that you would be liable to pay Zakat on it? I personally have no doubt that you would have to, because the reasons for you holding it and the reasons for having to pay Zakat on Gold are exactly the same. It is a store of value accepted for payment by a broad community of people.
If you cannot find a reliable market quote for converting your crypto value into gold, you can take the market price for gold in your local currency, then convert your crypto value into your local currency to find out how much you should give.
Zakat is an annual charity obligation for Muslims; this obligation is calculated based on a basic living index cutoff amount called nisab which represents a basic standard of living index. Those whose net wealth falls below this limit are exempt from paying zakat. Typically, the nisab equivalent to three ounces of gold. People having assets net greater than nisab for a full year qualify as having an obligation to pay zakat.
Blossom will accept payments in cryptocurrency directly via the Blockchain to a Blossom controlled wallet held at a cryptocurrency exchange in Indonesia. Blossom then converts the cryptocurrency to Indonesian Rupiah, and deposits the amount into the bank accounts of their cooperative and nonprofit partners located in rural areas in Indonesia.
Blossom's service is not intended for those who have non-cryptocurrency liquid assets, but rather for Muslims who specifically have cryptocurrency assets that are zakat-eligible and need an easy way to donate.
Blossom Finance helps institutions to raise cost-effective, Shariah-compliant financing from global investors using blockchain technology on its Smart Sukuk platform. Blossom was founded in 2014 to increase the availability of halal financial products using technology. Since 2015, Blossom has been helping microfinance institutions in Indonesia raise funds from international investors to fund micro-businesses aimed at reducing regional poverty. Blossom Labs, Inc. is a US Delaware corporation.
This is qualitative research in nature, as unstructured interviews with experts in the field were conducted to understand the existing practice regarding zakat on cryptocurrencies/crypto assets while literature on the topic was reviewed to derive conclusions.
It is anticipated that the findings of this research will benefit zakat organizations and zakat payers in understanding how they should deal with cryptocurrencies and crypto assets in the collection and payment of zakat.
In stock market if you hold shares for more then a lunar year you pay zakat only on dividend
So comparing to crypto if you have locked your coins for longterm it makes sense to only pay zakat on the yield
Allahu alam
* Zakat Disclaimer: As crypto currency can be volatile, ISB will disburse the amount of zakat equivalent to the value of crypto currency at the time the transaction is settled and received on ISB's end. The donor should track the transaction till the transfer is complete to ensure the crypto value transferred covers the individuals zakat obligation.
Example: Donor sends $1,000 for zakat donation and the donor's Crypto exchange puts a security hold/delay on the transaction; by the time the transaction is cleared and ISB receives the donation, the value of the crypto currency went down and ISB received $950. Therefore, ISB will be responsible for distributing $950. It is recommended to the donor to track the transaction till it settles and pay any gap in their zakat obligation if one exists.
If these tokens represent ownership in an asset and the tokens are purchased to resell, then they are subject to zakat at 100% of your current holding value. If purchased for dividend income & long-term investment, zakat will depend on the underlying assets of the company.
If these tokens represent ownership in an asset and the tokens purchased to resell, they are subject to zakat at 100% of your current holding value. If purchased to use, zakat will not be due on these tokens.
If purchased to resell, it will be subject to zakat at 100% of your current holding value. If purchased as an investment, Zakat will depend on the underlying asset. If it is a Zakatable asset, it will be subject to zakat.
If these tokens represent ownership in an asset and the tokens are purchased to resell, it is Zakatable at 100% of your current holding value. But if purchased to use, the zakat will not be due on these tokens.