The document provides an in-depth analysis of cryptocurrency's potential within Islamic finance, examining how digital currencies could align with Shariah principles. It explores key concepts such as the permissibility of cryptocurrencies under Islamic law, considering factors like interest-free tr...
Title: The Way Digital Assets can be Integrated into Islamic
Finance.
Student Name:
Student ID: 2237262
Centre for Islamic Finance
University of Bolton
Date of Submission:
Word Count:
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, Abstract
In general terms, Islamic banking is a productive and effective banking system which is operated
through complying the Shariah principles in an organised way. In nature, the system of Islamic
banking is a productive alternative to the system of traditional banking. On the other hand, the
development of digital assets is ensured through the evolution of technology. Virtual currency or
digital money are developed by the digital assets. The study seeks to determine the way digital
assets like cryptocurrency can be integrated into the Islamic banking system. In the way of
ensuring the aim of the study various objectives are developed by the study so that productive
guidance can be ensured for the study in an effective manner. Determination of the aspects will
contribute to the integration of the digital assets into the Islamic finance, identification of the
challenges and opportunities which are associated with the integration, and recognition of the
future of cryptocurrency in the Islamic banking are the objectives which are developed by the
study so that guidance can be ensured toward the aim of the research study in an effective
manner. The method of qualitative is applied by the researcher so that non-numerical data related
to the topic of the study can be obtained productively. In addition, the researcher applied the
method of secondary data collection so that a comprehensive understanding can be ensured on
the integration through the existed scholars and literature. Besides, the method thematic data
analysis is applied by the researcher so that insights can be obtained through the data in a
productive way. Valuable insights are provided by the research data. According to the study,
Shariah compliance, risk management, liquidity management, and many others are the
productive aspects which are significant to consider for the integration. In addition, halal coin is
found as the future of cryptocurrency in the Islamic finance.
4.2.1 Research Question One: Aspects Required for the Integration....................................34
4.2.2 Research Question Two: Challenges and Opportunities Associated with the
Integration..............................................................................................................................35
Figure 3: Future of Cryptocurrency in the Islamic Finance...........................................................38
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, Chapter One: Introduction
1.1 Research Background
In the landscape of modern finance, a rapid change is being determined in the era of finance or
money. Digital assets are putting a notable contribution to bring the change rapidly. A new and
effective platform is rooted by the digital assets so that financial activities can be performed in a
productive way in the ear of finance or money. In general terms, their various productive
examples of digital assets are available and one significant example is referred to as
cryptocurrency. Due to the productive contribution of cryptocurrency, various effectiveness’s are
emerged in the way of performing diverse financial activities (Egorova, 2019). In the system of
conventional banking, the tools of digital assets are being integrated in a productive way. The
integration of the digital assets is enabling the customers of conventional banking to consume
diverse benefits in an organised way. In the landscape of banking, the term Islamic banking or
finance is referred to as a significant alternative to the system of the conventional banking. In
general terms, a unique and productive banking model is developed and adopted by the system of
Islamic banking so that diverse banking operations can be managed and conducted productively.
Generally, the system of Islamic banking or finance complied with Shariah law. Diverse rules
and regulations are developed by the Shariah law which are taken into account in the principles,
operating system, and financial activities of Islamic banking. In general terms, digital assets are
significant tools of conventional banking and for this reason these tools are productively
integrating in the system of conventional banking. However, Shariah principles are not
considered by the digital assets. Therefore, a question is raised which is that the integration of
digital asset like cryptocurrency will be possible in the system of Islamic banking or in the
system of Islamic finance, will the tool cryptocurrency fit into (Iqbal, 2011).
1.2 Research Statement
The study will investigate the way integration of digital assets can be ensured into the Islamic
finance, the study will focus on the way Sharia-compliant principles can be adapted by digital
assets while the study will address challenges, opportunities, and regulatory implications. Riba is
a significant rule of Shariah law and according to the law interest is restricted in Islamic banking.
Gharar is another significant rule which is considered so that uncertainties can be avoided in the
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