Britain’s first Turkish-owned mosque made history this week becoming one of the first UK Islamic institutions to accept donations in Bitcoin – a digital or cryptocurrency operating independently from central banks.
The East London-based Masjid Ramadan, also known as Shacklewell Lane Mosque, “has embarked on a new venture, which is to take the Bitcoin as an accepted charity from those people who are giving charity in donation,” Imam Abduallah Abu Essa Adeyemi told a packed prayer room on Friday.
The mosque hopes to benefit from Zakat (or Zakah, annual alms-giving equivalent to 2.5% of a Muslim’s wealth) and Sadaqah (voluntary year-round donation) payments from Muslim cryptocurrency owners who are both obliged and encouraged to give selflessly during the holy month of Ramadan, or as Turks say Ramazan, which began in mid-May.
“We are a small independent mosque, which does not receive funding from anywhere. We are constantly trying to serve the local community, both Muslims and non-Muslims alike, and all support is most welcome. Muslims can now give Zakat or Sadaqah as Bitcoins and Ethereum via our website,” the mosque’s board of Trustees Chairman Erkin Guney told a press briefing on Monday.
The mosque, which is a registered charity, hopes to raise at least £10,000 from cryptocurrency this Ramazan and donations for this year are earmarked to serve three main functions, including essential repairs to the mosque building, providing assistance to poor Muslim families with funeral costs and offering food and shelter to those in need locally.
Gurmit Singh: “Bitcoin is often referred to as digital gold”
“Cryptocurrency is a decentralised method of transferring wealth. There are many cryptocurrencies specifically designed for this purpose but the most well-known and the one with the largest market cap [value] is Bitcoin” Gurmit Singh told T-VINE.
Mr Singh is the founder of London-based Islamic Finance blockchain technology start-up Combo Innovation, who advised and assisted the mosque on how to receive, store and sell cryptocurrency safely.
“Bitcoin is used to hold and transfer wealth” he explained, “Therefore Bitcoin is often referred to as digital gold”.
One Bitcoin is currently worth £5,658. This new money accounts for 37% of the cryptocurrency market, which is globally worth in excess of £290bn (stats from respected cryptocurrency ranking chart app CoinGekco). If Muslims own just 1% of all digital currency, then they are obligated to pay out Zakat on £2.9bn, creating a charitable pot of some £72.5mn. The figures are likely to be far higher, with this new revenue stream offering vital support to many small mosques and the charitable deeds they do.
When asked about how Combo Innovation helped Masjid Ramadan, Mr Singh explained “We provided advice and support for the mosque into accepting crypto donations. Our research showed that the value currently locked up in cryptocurrency was an opportunity to address the poverty that disproportionately affects Muslims.”
At the briefing on Monday, the fintech head highlighted that while a quarter of the world’s population are Muslims, they account for half of the world’s poor. Combo Innovation is developing a blockchain solution based on Islam’s Qard Hasan model to offer interest-free loans to those most in need and to pull them out of poverty.
Zayd al Khair: “Zakat is a gift, to help purify our wealth. Cryptocurrency is new, but its usage is growing. In these circumstances, someone needs to lead. We’ve started this ground-breaking campaign. If successful, many more mosques will embrace cryptocurrencies too”
Masjid Ramadan believes it can set an example for other Islamic institutions to adopt cryptocurrency as an additional way to collect donations for charitable works. “Zakat is a gift, to help purify our wealth. Cryptocurrency is new, but its usage is growing. In these circumstances, someone needs to lead. We’ve started this ground-breaking campaign. If it’s successful, I am sure many more mosques and [Islamic] charities will embrace cryptocurrencies too” said Zayd al Khair, a religious advisor to the mosque during Monday’s press briefing.
Islamic scholars (ulama) are divided over whether cryptocurrency is halal (permissible) or haram (not permissible). Both taking interest and gambling through currency speculation (i.e. purchasing, holding and selling currencies for profit from favourable changes in exchange rates) are forbidden in Islamic commercial and financial activities. This, alongside user anonymity, the lack of a central regulator such as a state, and the potential for cryptocurrency to be used in illegal activities, has led some Islamic authorities to denounce Bitcoin as haram.
“Buying and selling virtual currencies is not compatible with religion at this time because of the fact that their valuation is open to speculation, they can be easily used in illegal activities like money laundering and they are not under the state’s audit and surveillance,” said Turkey’s official Directorate of Religious Affairs in a ruling last November.
Other ulama have supported cryptocurrency, arguing that there were similar concerns when fiat currency (paper money) was adopted instead of gold.
Bitcoin was first considered permissible in principle in April in a working paper by Mufti Muhammad Abu Bakar, an Islamic Finance specialist and Shariah (Islamic Law) Consultant who was then Head of Shariah Compliance at the Indonesian company Blossom Finance. In his paper, Mr Abu Bakar – who studied under Pakistani Grand Mufti Muhammad Rafi Usmani at the world renowned Islamic University the Jamia Darul Uloom in Karachi – addressed arguments declaring Bitcoin haram.
Islamic finance scholar Abu Bakar: “Bitcoin and cryptocurrency cannot be declared haram…if this principle was valid and applied, then trading in gold, silver, US Dollars, and Euros would all be ruled impermissible, since those assets also experience extreme levels of speculation”
“Bitcoin and cryptocurrency cannot be declared haram (impermissible) based on the fact that they experience speculation. In fact, if this principle was valid and applied, then trading in gold, silver, US Dollars, and Euros would all be ruled impermissible, since those assets also experience extreme levels of speculation,” he wrote.
Mr Abu Bakar also dismissed concerns surrounding the use of the coin for illegal acts in a similar way, explaining that “the use of something lawful for an unlawful purpose does not make the thing itself unlawful. An example from the Hadith can be found in that the Prophet Muhammad (peace be upon him) forbade the selling of grapes to a wine merchant, since making wine is haram (impermissible), but did not forbid the production or trading of grapes for lawful purposes.”
He also argued that the absence of status as legal tender or state recognition is not enough to disqualify Bitcoin from being a legitimate currency, as the acceptance of a currency by people is the main criteria according to Shariah; its ability to protect wealth is also important. Offering an example of Bitcoin fulfilling this function, the Mufti pointed to the fact that some Venezuelans are opting for Bitcoin as a more reliable unit of exchange and store of value amid their country’s economic crisis in which inflation has meant a loaf of bread could cost barrels of paper money.
Masjid Ramadan has carefully considered the debate and gone to lengths to ensure that it accepts Bitcoin donations without committing any impermissible acts. “There is no trading, that’s the first thing that needs to be clear, the mosque is not trading in Bitcoin, however this is an outlet for those who have maybe inherited Bitcoin, or it was given to them or those who want to dispose of it. At the end of the day, currency is currency, we will make use of it in regular services like any other donations” said Imam Adeyemi in his Friday sermon.
Masjid Ramdan’s Imam Adeyemi said Bitcoin, “is just a coin, like any other currency, and are able to be given as [Zakat] donations”
“For us it is not an endorsement for you to go and trade because of how it works and the possibilities of what surrounds it can be doubtful, but what is not doubtful is that the coin itself, it is just a coin, it is like any other currency and those are able to be given as donations, this will be transferred into sterling and it will go towards the other avenues of refurbishment and so forth.”
Once received, the mosque has promptly liquidated donations, so it does not fall foul of Islam’s speculation rule that concerns some given the volatile valuation of Bitcoin in particular. The transaction takes about 30 minutes, after which the amount in Sterling will be deposited directly into the mosque’s bank account.
Masjid Ramadan believe the potential additional income from Bitcoin donations present the mosque with an opportunity to do social good. Speaking to T-VINE, Imam Adeyemi said “We can redevelop the mosque, we can redevelop the community, we can have more services. Social order here is at its worst ever, there’s a lot of gang violence, domestic violence, drug addicts and as a religious entity that stands in the community we cannot be heedless and let this go by”.