Islamic Finance

London mosque starts accepting cryptocurrencies for zakat

| 22 May, 2018
 Emmy Abdul Alim
London mosque starts accepting cryptocurrencies for zakat
Photo: Gurmit Singh, founder of Combo Innovation, Erkin Guney, chairman of Masjid Ramadan Board of Trustees, and Zayd al Khair speaking at a media event at the Shacklewell Lane mosque in London, United Kingdom on May 21, 2018. Photo supplied by Masjid Ramadan

*Update: Para 16 updated to clarify zakat calculation

A mosque in London has become the first mosque in the United Kingdom to start accepting Bitcoin and Ethereum for zakat to give the opportunity for Muslims using cryptocurrencies to pay their obligatory tithes, Zayd al Khair, religious advisor at Shacklewell Lane Masjid Ramadan told Salaam Gateway.

“What we are doing from a mosque perspective is opening the doors of opportunity for those that are using cryptocurrencies, for them to be able to give zakat on their wealth,” al Khair told Salaam Gateway.

Zakat is an annual 2.5 percent tithe that is mandatory on Muslims who meet a minimum amount of wealth.

The mosque, which is managed by registered charity UK Turkish Islamic Trust, will also be accepting sadaqah, or regular charity donations, in Bitcoin and Ethereum.

It aims to raise 10,000 British pounds ($13,460) this Ramadan from cryptocurrency, while also continuing to collect zakat and sadaqah in traditional fiat currency.

The funds will mainly be channelled to essential repairs at the mosque in East London.

“Hopefully we’ll reach the 10,000 pound mark that will get things moving for us. We’re an old building and it needs renovation,” said Erkin Guney, chairman of the Board of Trustees at Masjid Ramadan.

The collection will also be used to assist Muslim families with funeral costs, and feeding and offering shelter to those in need in the local area.

“Funeral expenses in this country are very expensive,” said Guney, who is also a funeral director.

“They’re expecting people to find 5,000 pounds for a funeral when they’re dead. People can’t find this money when they’re alive,” he added.

The Shariah-compliance of cryptocurrencies is still debated in the Islamic finance industry as well as in the wider Islamic economy and there is no clear guidance on their religious permissibility.

The main issue addressed is if they fall in the ‘ribawi’ category that includes commodities such as gold and silver, which must be transferred fully and immediately.

“We have a board of scholars, like the imam and a few of the other imams, and at the same time, we have consulted those that have specialised in Islamic finance,” said Al Khair, referring to UK’s Mufti Abdul Qadir Barkatulla’s published personal opinion that supports the use of cryptocurrencies in Islamic finance. Barkatulla sits on the Shariah board of the UK’s only Islamic retail bank, Al Rayan Bank.

“Those who are against the usage of cryptocurrencies wouldn’t be our audience,” added al Khair.

Masjid Ramadan’s zakat and sadaqah cryptocurrency collection was developed by new London blockchain start-up Combo Innovation, whose founder Gurmit Singh “guesstimates” that global zakat on Bitcoins alone could be as much as 26 million pounds.

This is based on Muslims holding 1 percent, or 1.04 billion pounds, of the total market cap on Bitcoin, which was estimated at 104 billion pounds by CoinGecko, a cryptocurrency data provider. 26 million pounds is the optimal zakat if the 2.5 percent tithe was paid on the whole sum of 1.04 billion pounds. 

The mosque started its cryptocurrency collection on May 17 but as of yesterday had not received any donations.

Masjid Ramadan is not the first Muslim charity in the UK to start accepting cryptocurrency zakat and sadaqah. The charity Helping Households Under Great Stress (HHUGS), which supports Muslim households, started accepting donations in cryptocurrencies in January this year.

Other UK charities that have started accepting donations in cryptocurrencies include the Royal National Lifeboat Institution and the Turing Trust.

(Reporting by Emmy Abdul Alim; Editing by Seban Scaria seban.scaria@thomsonreuters.com)

($1 = 0.7429 British pounds)

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